ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: In the circular flow model, both the resource market and product market play a vital role, but they are different. The product market deals with finished goods, but the resource market deals with the resources used to produce the finished goods.

Detailed explanation-2: -The circular flow model shows the interaction between two groups of economic decision-makers-households and businesses-and two types of economic markets-the market for resources and the market for goods and services.

Detailed explanation-3: -Between the two are the product market and the resource market. Households purchase goods and services, which businesses provide through the product market. Businesses, meanwhile, need resources in order to produce goods and services. Members of households provide labor to businesses through the resource market.

Detailed explanation-4: -Amazon-Amazon is a prime example of a resource market as corporations can acquire certain factors of production, such as vehicles and industrial equipment. It usually specializes as a product market but has also become a resource market in recent times.

Detailed explanation-5: -In the product market, households act as buyers purchasing the goods and services businesses are willing to sell. In the resource market, the roles are reversed with businesses paying households for their resources: land, labor, capital and entrepreneurship.