Question: Most people recognize that, as a group, consumers are the pivotal participants in the economy. The decisions made by consumers determine which goods and services
Most people recognize that, as a group, consumers are the pivotal participants in the economy. The decisions made by consumers determine which goods and services will be produced by businesses, just as their investment and saving decisions will strongly influence conditions in the markets. Another indication of the importance of consumers is the effect their collective spending has on the economic activity level observed in the economy. in the level of consumer spending is usually credited with causing and all benefits or costs that go with it. How do businesses contribute to conditions in the economic environment? Businesses sell to consumers and government organizations, providing them with in return for . To accomplish this, businesses transform the inputs to the production process provided by consumers (namely land, labor, equipment, managerial talent, and a willingness to take risks) into finished products and services. In return, consumers are paid in the form of rent, wages, interest, and profits. Businesses, or are probably the most constrained participant in the economy, because in the long term their choice of goods and services produced is dictated by the purchasing preferences of consumers and government organizations, or . In addition, businesses are also constrained by the
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