16. Which statement is true about the circular flow diagram? a. A Households are demanders in the product market and suppliers in the factor market b. A Business are demanders in the product market and suppliers in the factor market. C. A Households are demanders in the factor market and suppliers in the product market. d. A Businesses and households are not components of the circular flow diagram. 17. The circular flow model of a market economy shows a. how profits are made b. what inputs are required for what outputs c. how many firms can support the needs of how many households d. the interactions between households and firms in the free market 18. In the circular flow model, the product market describes a. stores that sell goods and services to households b. the government paying for public goods c. households selling their labor to businesses d. households receive income from businesses 19 Steel Beam Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow diagram, this transaction will take place in the a. Product market. C. Foreign Exchange market b. Resource market d. Public market 20. Steel Beam Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow diagram, this transaction will take place in the a. Product market. c. Foreign Exchange market b. Resource market d. Public market 21. Why do markets exist? a. to allow people to exchange goods and services b. to allow people to earn money c. to increase profits for business owners