Question

Suppose Megan earns $750 per week working as a programmer for PC Pros. She uses $8 to order a mojito cocktail at Little Havana. Little Havana pays Larry $275 per week to wait tables. Larry uses $250 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market.

Answer 1

Factor market; Product market; Factor market; Product market

Step-by-step explanation:

Megan is working for PC pros, she is providing her factor services and earning factor income in return. So this transaction is taking place in the factor market.

Megan is than buying a Mojito cocktail from little Havana. This cocktail is good so the transaction is taking place in the product market.

Larry is working for Little Havana providing factor services and earning factor income in return. This transaction is taking place in the factor market.

Larry is using this factor income to purchase software from PC pros and pay for it. This transaction is taking place in the product market.