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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 primarily act as buyers, purchasing goods and services from firms. However, in the labor market, households primarily act as sellers, supplying their labor to firms in exchange for wages or salaries.

Step by step solution

01

Understanding Goods and Services Market

The goods and services market is where households purchase goods and services from firms. Firms produce these goods and services using factors of production, such as labor and capital.
02

Household's Role in Goods and Services Market

Households typically act as buyers in the goods and services market. They buy goods like food, clothing, and electronics and services like healthcare, education, and entertainment.
03

Analyzing the Labor Market

In the labor market, firms and households interact differently. The labor market is where firms demand labor (workers) and households supply labor. Households supply labor by providing their time and skills in exchange for wages or salaries.
04

Household's Role in the Labor Market

In the labor market, households act primarily as sellers. They sell their labor to firms in exchange for a wage or salary. To summarize: In the goods and services market, households are primarily buyers as they purchase goods and services from firms. In the labor market, households are primarily sellers as they supply their labor to firms in exchange for wages or salaries.

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