Final answer:
Households are a critical component of the economy, mainly acting as buyers in the goods and services market and as sellers of labor in the labor market. They contribute to the Circular Flow Model by demanding goods and services and providing labor. The roles within households have evolved due to technological and industrial developments.
Step-by-step explanation:
Roles of Households
Households play a crucial role in the economy as consumers of goods and services provided in product markets. They are integral to the Circular Flow Model, which captures the continuous movement of money, goods, and services between producers and consumers in an economy. In this model, households are not only the main demanders of goods and services but also supply labor and human resources necessary for the production of these goods and services.
Households as Buyers and Sellers
In the goods and services market, households are primarily buyers as they consume goods and services. Conversely, in the labor market, households act as sellers when they provide labor to firms in exchange for wages. Thus, they play a dual function in the economic system, being both consumers and providers.
While traditionally households were seen as the domain of domestic chores, technological advances and industrial growth have led to significant changes. The advent of labor-saving devices and the mass production of consumer goods have altered the traditional roles within households, especially regarding gender-based roles, such as women being primarily responsible for homemaking.