A market in which firms purchase the factors of production from households is called

A market in which firms purchase the factors of production from households is called

• A. Factor Market
• B. Product Market
• C. Labour Market
• D. Capital Market

Answer: (A)

The main idea is where firms obtain the inputs they need to produce goods and services. Firms buy factors of production (like labour, land, and capital) from households in a marketplace called the factor market. This is the arena that covers all inputs, not just one type. If firms were buying finished goods from firms, that would be the product market. A labour market is a part of the factor market focused specifically on workers, while the capital market usually refers to financial resources rather than the physical inputs of production. So the best fit for a market where firms purchase factors from households is the factor market.

The main idea is where firms obtain the inputs they need to produce goods and services. Firms buy factors of production (like labour, land, and capital) from households in a marketplace called the factor market. This is the arena that covers all inputs, not just one type. If firms were buying finished goods from firms, that would be the product market. A labour market is a part of the factor market focused specifically on workers, while the capital market usually refers to financial resources rather than the physical inputs of production. So the best fit for a market where firms purchase factors from households is the factor market.