ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Households, in the Resource Market (factor market), are the owners of the productive resources (factors of production) in the circular flow model. They sell their land, labor, capital, and entrepreneurship to businesses (firms) in the Resources Market in exchange for income payments.

Detailed explanation-2: -Households sell land, labor, capital, and entrepreneurial activity in exchange for money, which in this case is called income. Households are buyers in the market for goods and services. Households exchange income for goods and services. Businesses are sellers in the market for goods and services.

Detailed explanation-3: -Households provide the factors of production (labour, land, and capital) to the firms through the markets for factors of production. The firms will then use these factors of production to produce goods and services to be sold in the markets for goods and services.

Detailed explanation-4: -In the product market, businesses are the sellers while households are the buyers. In the resource market, businesses are the buyers while households are the sellers. The flow of resources, goods and services, and money occur in a circular flow model.

Detailed explanation-5: -Households sell their labor as workers to firms in return for wages, salaries, and benefits. This is shown in the inner circle and represents the two sides of the labor market in which households supply and firms demand.