Problem

Are firms primarily buyers or sellers in the good…

00:32

Problem 16 Easy Difficulty

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

Answer

Households are the sellers in a labor market Labor market is the place where employers and workers interact with each other to manufacture, produce and sell the goods and services. Households provide labor in a labor market as they provide their services in order to produce and sell the goods and thus get income in return.

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Principles of Microeconomics for AP® Courses

Chapter 1

Welcome to Economic

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Video Transcript

everyone. Today we're solving problem number 16 from Chapter one of the textbook, which asks our households, primarily buyers or sellers in the goods and service is market and our households primarily buyers or sellers in the labor market. So in order to figure this out, we need to figure we need to understand what a circular flow diagram and economic skips. And, um, this is a great model to start with an economics because it pictures the economy consisting of two groups. You have households and one group and firms in the other. Um, and these two groups will interact in two markets. The goods and service is market and the labor market. So in the goods and service is market. Um, looking at the circular flow diagram, we see that, um, that's the general description. I just gave the two different groups in two different markets. The goods and service is marketing the labor market. So, um, the direction of error shows that in the goods and service is market households received goods and service is and pe firms for that, so they're paying for their goods and services. So if you're paying, are you a buyer or you're settling well, clearly, you're buying it. So in to answer the question, households are primarily buyers in the Vinson service's market. Now the snares a little bit different in the labor market. If we look at the labor market with households, they're the ones giving out. Their labor service is to the firm's well, then essentially buy it through reduced salaries and benefits. So if they're giving it out, are they selling it? Are they buying? Well? Clearly, they're the sellers in the lead. So just to reiterate, houses are primarily buyers, and the goods and service is market and sellers of the legal work it. And there you have it. If you guys enjoying my explanation, Police of the light. But let's to it. I hope you all have a nice day and thank you for watching

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