Answer:
In exchange for rent/royalty, wages/salaries, interest, and profit. All of which accrue to households, for the FOP they sell.
Step-by-step explanation:
In the Circular Flow of Income model, the movement of money and resources is described/illustrated.
The factor market is the arrangement where factors of production are bought and sold. Remember that factors of production are classified into 4 groups:
- land - labor - capital - entrepreneur
In a 2-sector economy, the players in the circular flow model will be Households & Firms
The factor market of the CFM will have households providing the factors of production and firms purchasing the factors of production.
So in the factor market of the CFM, firms receive factors of production from households, in exchange for payments such as rent (for land), income (for labor), interest (for capital), and profit (for entrepreneurial/management skills).
