Which of the following best characterizes the market system?
A)Households buy goods and sell factors of production.Businesses sell goods and buy factors of production.
B)Households buy goods and factors of production.Businesses sell goods and factors of production.
C)Households sell factors of production.Businesses sell goods and buy factors of production.
D)Households buy and sell goods.Businesses buy factors of production.
E)None of the above.

Question

Quizplus · Accepted Answer

In a market system, households typically own the factors of production (such as labor, land, and capital) and sell these to businesses. In return, businesses pay households for these factors of production. Businesses use these factors to produce goods and services, which they then sell back to households. Thus, households buy goods and services from businesses, and businesses buy factors of production from households, making choice A the correct characterization.

Which of the Following Best Characterizes the Market System