The simple circular flow model shows that workers and capital-owners offer their services to firms through the:
A) Product markets
B) Resource markets
C) Employment agencies
D) Government agencies

Question

Quizplus · Accepted Answer

Workers and capital-owners offer their services to firms through the resource markets, which is the market where the factors of production (labor, capital, land, and entrepreneurship) are bought and sold. In the simple circular flow model, firms purchase these factors of production in the resource markets, and in turn, they use them to produce goods and services that are sold to households through product markets. Employment agencies and government agencies are not part of the simple circular flow model.

The Simple Circular Flow Model Shows That Workers and Capital-Owners