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In a circular flow diagram, labor and other factors of production are sold in resource markets. These resources are then used to produce goods and services sold in product markets. How are businesses involved in this flow?



Businesses sell goods and services in product markets.


In product markets, businesses sell factors of production.


Businesses purchase goods and services in product markets.


In resource markets, individuals buy factors of production.

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Answer: Businesses sell goods and services in product markets.

Explanation: Circular flow diagram shows the flow of goods and services from Firms to the Households and Factors of production from the Households to the Firms. The firms money from the sale of those goods and services and the households get factor payment.

Thus, Business are sell goods and services in product markets in a circular flow diagram.

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