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Chapter 4: Q14 (page 104)

Are households demanders or suppliers in the goods market? Are firms demanders or suppliers in the goods market? What about the labor market and the financial market?

Short Answer

Expert verified

Goods Market : Demanders - Households ; Suppliers - Firms. Labor Market : Demanders - Firms ; Suppliers - Workers. Financial Market : Demanders - Borrowers ; Suppliers - Lenders

Step by step solution

01

Basic Definitions

Demanders are people who are able and willing to buy a good or service at a price.

Suppliers are people who are able & willing to sell a good or service at a price.

02

Detail Explanation 

In goods market - demanders (buyers) of goods, & services are households & suppliers (sellers) are firms.

In labor market - demanders (buyers) of productive services are firms, & their suppliers (sellers) are workers.

In financial markets - demanders (buyers) of loans are borrowers, & their suppliers (sellers) are lenders.

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Most popular questions from this chapter

Which of the following changes in the financial market will lead to a decline in interest rates:

a) rise in demand

b) fall in demand

c) rise in supply

d) fall in supply

During a discussion several years ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating that there should be a guaranteed minimum price for the natural gas that would flow through the pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline.

a. Using the demand and supply framework, predict the effects of this price floor on the price, quantity demanded, and quantity supplied.

b. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in the market?

c. Suggest some policies other than the price floor that the government can pursue if it wishes to encourage drilling for natural gas and for a new pipeline in Alaska.

In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve?

Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?

If the government imposed a federal interest rate ceiling of 20% on all loans, who would gain and who would lose?
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