Question

Refer to the diagram. Arrows (3) and (4) represent Businesses Households O A Income becomes more equally distributed. O B. Firms have to pay more to attract inputs, as these inputs have to share the risk. O C. Firms focus attertion on prudent risk management, as it is profitable to manage risk. O It encourages more people to become entrepreneurs.
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Answer #1

Arrow (3) represents a flow from businesses (firms) to households which could be either goods and services or factor payments.

On the other hand, (4) shows a flow from households to firms which could be prices of goods and services or factor inputs.

Considering the flows are related to flow of factor input and their payments, these arrows represents option (B).

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