CONTEMP 3

is an organization that transforms

resources (inputs) into products (outputs).

Firms are the primary producing units in a

market economy.

is a person who organizes,

manages, and assumes the risks of a firm,

taking a new idea or a new product and

turning it into a successful business.

are the consuming units in an

economy.

shows

the connections between

firms and households in

input and output markets.

are the markets

in which goods and

services are exchanged.

are the markets in which resources—labor, capital, and land—used to

produce products, are exchanged.

in which households supply

work for wages to firms that demand labor.

in which households supply

their savings, for interest or for claims to future

profits, to firms that demand funds to buy capital

goods.

in which households supply

land or other real property in exchange for rent.

Determinants of Household Demand