Chapter 1: Problem 16

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

Short Answer

Expert verified

In the goods and services market, households primarily act as buyers, as they consume various products and services produced by vendors. In contrast, in the labor market, they primarily act as sellers, providing their labor services in exchange for wages or salaries, acting as the suppliers of labor.

Step by step solution

Define Goods and Services Market

The goods and services market is where various products and services are bought and sold between producers/vendors and consumers. A household is considered a consumer in this market.

Household's Role in Goods and Services Market

In the goods and services market, households are the consumers because they purchase the goods and services produced by different vendors. Thus, in this market, their primary function is to act as buyers.

Define Labor Market

The labor market is the market where different types of jobs and services are offered by individuals/employees and demanded by firms/employers. In the labor market, households are considered to be suppliers of labor.

Household's Role in Labor Market

In the labor market, households act as sellers, as they provide their labor services in exchange for wages or salaries. They are the suppliers of the labor force required by the employers/firms in the market. To summarize:

Goods and Services Market

Households are primarily buyers in the goods and services market where they purchase various products and services.

Labor Market

Households are primarily sellers in the labor market, as they supply their labor services to the employers in exchange for wages or salaries.

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