Questions: Question 25 2 pts In the market for goods and services in the circular flow diagram, households are buyers and firms are sellers households and firms are both sellers households and firms are both buyers firms are buyers and households are sellers

The answer is: households are buyers and firms are sellers.

Explanation for each option:

1. Households are buyers and firms are sellers: This is the correct answer. In the circular flow diagram, households purchase goods and services from firms. Households spend money to buy these goods and services, which represents the flow of money from households to firms. In return, firms provide the goods and services that households need.

2. Households and firms are both sellers: This is incorrect. In the market for goods and services, households are not sellers; they are buyers. Firms are the sellers in this market, providing goods and services to households.

3. Households and firms are both buyers: This is incorrect. In the market for goods and services, households are the buyers, and firms are the sellers. Firms do not buy goods and services from households in this context.

4. Firms are buyers and households are sellers: This is incorrect. This statement would be true in the factor market, where firms buy factors of production (like labor) from households. However, in the market for goods and services, the roles are reversed, with households as buyers and firms as sellers.