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Are households demanders or suppliers in the goods market? Are firms demanders or suppliers in the goods market? What about the labor market and the financial market?

a) Households are demanders; firms are suppliers.
b) Households are suppliers; firms are demanders.
c) Households and firms are both demanders in the goods market.
d) Households and firms are both suppliers in the goods market.

1 Answer

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Final answer:

In the goods market, households are demanders and firms are suppliers. In the labor market, households supply labor and firms demand it. In the financial market, savers supply capital, and borrowers demand it.

Step-by-step explanation:

In the goods market, households are typically the demanders as they buy products and services for personal use. Conversely, firms are usually the suppliers because they produce and sell those goods and services. When it comes to the labor market, roles are reversed; households become the suppliers of labor as individuals offer their work (skills and time), while firms are the demanders as they look to hire employees. In the financial market, individuals and firms who save money by making deposits in a bank or investing contribute to the supply of capital. Those who seek capital, such as borrowers or companies looking to raise funds through stocks and bonds, are the demanders of financial resources.