Households are an essential part of the circular flow of goods because:A.households produce services that cannot by supplied by businesses.B.businesses could not make a profit without revenue from households.C.households are the main source of natural resources in an economy.D.businesses rely on households to create new product markets.
Question
Households are an essential part of the circular flow of goods because:A.households produce services that cannot by supplied by businesses.B.businesses could not make a profit without revenue from households.C.households are the main source of natural resources in an economy.D.businesses rely on households to create new product markets.
Solution
The correct answer is B. Businesses could not make a profit without revenue from households.
Here's why:
In the circular flow of goods and services, households play a crucial role. They provide businesses with the revenue they need to make a profit. This happens when households purchase goods and services from businesses. Without this revenue from households, businesses would not be able to cover their costs, let alone make a profit.
Option A is incorrect because both households and businesses can produce services. Option C is incorrect because natural resources are typically sourced from various places, not just households. Option D is incorrect because while households do contribute to new product markets, businesses do not solely rely on them for this.
Similar Questions
Households play a role in the circular flow of goods by:A.selling goods that companies produce.B.purchasing goods at product markets.C.designing and producing new goods.D.providing natural resources to businesses.
Which situation best illustrates the role of households in the circular flow of goods?A.A website sells T-shirts promoting a popular band.B.A factory produces parts used to make new cars.C.A family buys a new TV at an electronics store.D.A company develops a new brand of smartphone.
In the circular flow model:Multiple Choiceall of these hold true.households receive income through the factor market.households supply factors of production to firms.households spend income in the product market.
Which statement best summarizes the role of households in the flow of goods?A.Households supply businesses with raw materials they need to operate.B.Household expenditures flow to the product market in exchange for products.C.Households exchange money for products in resource markets.D.Households sell products created by businesses to other markets.
The circular flow of income and expenditure emphasizes the interdependence between: A. Households and the government B. Businesses and the financial sector C. Households and businesses D. Imports and exports
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