In order for an economy to be successful, there must be some form of organization. Firms produce products that are marketed and sold. There must be people who desire to purchase and consume the products that are produced by the firms. This group of individuals that consumes the products that are produced in a market economy are known as households.

Question

Delilah

Business

7 October, 01:41

In order for an economy to be successful, there must be some form of organization. Firms produce products that are marketed and sold. There must be people who desire to purchase and consume the products that are produced by the firms. This group of individuals that consumes the products that are produced in a market economy are known as households.

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Answers (1)

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Omar Wade · Answer 1

TRUE

Explanation:

What generally happens in an economy in order to strike a balance and achieve success, is the interdependence of Firm and household

Firms use households to pay factor incomes which is rent, wages, interest and profit.

1. Household supply factors of production to firms

2. Firms pay factor incomes to Households for the supply of factors of production in the form of rent, wages, interest and dividends.

3. Firms will use factors of production provided by household to produce output in the form of goods and services.

4. The output of Firm are supplied to Household in the form of goods and services and household pays for these purchases.