Question

Suppose Ginny earns $825 per week working as a corporate attorney for Rowan and Martin Associates. She uses $10 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Eric $450 per week to work the cash register. Eric uses $325 to purchase legal service from Rowan and Martin Associates. Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services. Event Market for Factors of Production Market for Goods and Services Eric spends $325 to purchase legal service from Rowan and Martin Associates. Ginny earns $825 per week working for Rowan and Martin Associates. Eric earns $450 per week working for Pillmart Pharmacy.

Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.
a. The $325 Eric spends to purchase legal service from Rowan and Martin Associates
b. The $450 per week Eric earns working for Pillmart Phar

Answer 1

Check the explanation below

Step-by-step explanation:

1). Hubert earns $450 per week working for Pillmart Pharmacy.

The event will occur in the factor market with Hubert offering his factor services as employee to Pillmart Pharmacy

2). Kate earns $875 per week working for Classy's Jewelry Store.

The event will occur in the factor market with Late offering his factor services as employee to Jewelry Store

3). Hubert spends $325 to purchase necklace from Classy's Jewelry Store.

The event will occur in the product market with Hubert buying goods from the product market.

The $325 Hubert spends to purchase necklace from Classy's Jewelry Store represents flow of dollars from households to the firm in terms of expenditure incurred of products.

Kate's Labor will be flow of factor services or inputs from households to firm and the earning in turn will be the factor payments and flow of dollars from firms to households.

The earning of hubert again will be factor payments or flow of dollars from firms to households