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According to the OCR, the firms are described as:
AProduction units
BConsumption units
CDistribution centres
DFinancial intermediaries only
Answer & Solution
Correct answer: A. Production units
1. Per OCR: "The firms and the households are the basic economic entities in an economy. The firms are the production units and households are the consumption units."
2. Two-sector model.
3. Households supply factors; firms produce goods.
_Source: ICMAI BoS CMA Foundation Paper 4 (FBEM) — Paper4_07042026.pdf, Module 1 §1.1 (page 11)_