Households own
all the economic resources in the economy
. The economic resources are land, labor, capital, and entrepreneurial ability.
Are households resource owners?
In a free-market, money-based economy, households, as resource owners,
sell their resources to firms for money income
. As consumers, households spend their money income buying goods and services. Firms must spend money in order to buy the resources used to produce goods and services.
Do households buy resources?
Households not only provide factors of
production
(or resources) but also consume goods and services. Businesses not only buy resources but also produce and sell both goods and services.
What do households provide to the resource market?
Members of households provide
labor to businesses
through the resource market. In turn, businesses convert those resources into goods and services.
What do firms buy from households?
Households supply
labor
to firms and are paid wages in return. Firms use that labor to produce pizzas and sell those pizzas to households. There is a flow of goods (pizzas) from firms to households and a flow of labor services (worker hours) from households to firms.
Are households primarily buyers or sellers?
Notice that households and businesses are
both buyers and sellers
. Households are sellers in the market for resources. Households sell land, labor, capital, and entrepreneurial activity in exchange for money, which in this case is called income. Households are buyers in the market for goods and services.
Why must firms buy resources from households?
b) Businesses buy resources from households because
they are necessary for producing goods and services
.
What are the 3 economic questions?
- What to produce? ➢ What should be produced in a world with limited resources? …
- How to produce? ➢ What resources should be used? …
- Who consumes what is produced? ➢ Who acquires the product?
(1) what to produce, (2) how to produce, and (3) for whom to produce
. What is produced? based on custom and the habit of how such decisions were made in the past.
What are the 5 economic questions?
- What will be produced?
- How will goods and services be produced?
- Who will get the output?
- How will the system accommodate change?
- How will the system promote progress?
What are three examples of resource markets?
The mall, convenience stores, ebay, amazon.com
… A market where a business or the government can go to purchase resources (factors or production – land, labor, resources, and entrepreneurship) from households in order to produce goods and services. 3.
What is an example of a resource market?
The resource market, for example, includes
the labor that is used to make cars but also the glass and the steel and the other things that go into the actual car
. … Resource markets is where businesses buy the things that they need in order to produce the goods and services.
What are three goods examples?
- freshwater.
- fish for fishing.
- wildlife to hunt.
- timber from trees.
- wildflowers to pick.
- fresh air.
- park benches.
- coal.
What is the difference between households and firms?
1)
firms are the hirer of factor of production from the household
. 2) household are the consumer of goods and services. 2)firms are the producers of goods and services.
Why do households sell their labor to businesses?
Businesses provide individuals with income (in the form of compensation) in exchange for their labor. That income is, in turn, spent on the goods and services businesses produce. … Households sell their labor as
workers to firms in return for wages, salaries and benefits
.
Is food a good or service?
The court held that under the common law the furnishing of food at a restaurant is not a sale but
merely a service
.
