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Chapter 1: Q.17 (page 25)

Are firms primarily buyers or sellers in the goods and services market? In the labor market?

Short Answer

Expert verified

The firms are especially vendors in the goods and services demand. In the labor demand, they are primarily buyers.

Step by step solution

01

Concept introduction

The circular flow indicates the endless flows of production of goods and services, income, and expense in an economy.

02

Explanation

The main parts of the circular flow are individuals, companies, the demand for goods and services, and demands for factors of production.

In the labor market, the firms are buyers of labor services. They use these labor services along with other inputs to produce goods and services which are then sold in the goods market.

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