Question

How do businesses and individuals participate in both the product market and the factor market in an economy

Answer 1

Individuals earn incomes in factor markets when they sell their labor. Businesses hire workers, acquire land, and borrow money in the factor market. Businesses sell their goods and services in product markets, and individuals spend their income on those products.
Through these participations all the resources that exist within a society will be distributed from one place to another. The residual amount that left after the main consumption could be allocated to improve infrastructure and other future investment.