Question

uel,sehölds earn income when firms purchase factors in factor markets. Suppose Ginny earns $700 per week working as work as a flight attendant for Flyaway Airlines. She uses $8 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 air travel to Hawail from Flyaway Airlines. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Ginny spends $8 to buy a box of aspirin. Eric spends $325 to purchase air travel to Hawail from Flyaway Airlines. Ginny earns $700 per week working for Flyaway Airlines. Factor Market Product Market Which of the elements of this scenario represent a fnlow from a firm to a household? This could be a flow of dollars, Inputs, or outputs. Check all that apply. The $325 Eric spends to purchase air travel to Hawaili from Flyaway Airlines The $450 per week Eric earns working for Pillmart Pharmacy The aspirin Ginny receives Ginny's labor Grade It Now Save & Continue Continue without saving

Answer 1

1) Solution:

	Factor Market	Product Market
Ginny spends $8 to buy a box of aspirin		Product Market
Eric spends $325 to purchase air travel to Hawai from Flyway airlines		Product Market
Ginny earns $700 per week for flyway airlines	Factor Market

　

Explanation: In this case households sell resources in factor markets when Eric supplies her labor to Little Havana and when Ginny supplies his labor to Flyway airlines. Furthermore a firm sells goods and services to a household in product markets when Ginny and Edison spends their earnings to purchase box of aspirin and air travel bag

　

2) Solution: Ginny's's labor; The $325 Edison spends to purchase air travel to Hawai from Flyaway Airlines

Explanation: When Ginny's (a household) supplies the labor to any firm, labor is an input that flows from a household to a firm. When Edison spends to purchase air travel to Hawai from Flyaway Airlines it is a payment that flows from a household to a firm