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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 are primarily buyers as they purchase goods and services to meet their needs and wants. In the labor market, households act as sellers, supplying their labor in exchange for wages and other forms of income.

Step by step solution

01

Role of Households in the Goods and Services Market

In the goods and services market, households act as buyers. They purchase goods and services to meet their needs and wants, such as food, clothing, healthcare, and education. These goods and services are produced by firms that sell them to households. So, households are primarily buyers in the goods and services market.
02

Role of Households in the Labor Market

In the labor market, households act as sellers. Households supply their labor in exchange for wages, salaries, and other forms of income, which they use to purchase goods and services. The labor they provide is a resource used by firms in their production process. Therefore, households are primarily sellers in the labor market.

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