Question

Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when purchase in factor markets. Suppose Caroline earns $825 per week working as an analyst for A-Plus Accountants. She uses $10 to get her car washed at Spotless Car Wash. Spotless Car Wash pays Antonio $500 per week to wash cars. Antonio uses $350 to purchase tax services from A-Plus Accountants. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Antonio earns $500 per week working for Spotless Car Wash. Caroline earns $825 per week working for A-Plus Accountants. Caroline spends $10 to get her car washed. 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. The car wash Caroline receives Caroline's labor The $500 per week Antonio earns working for Spotless Car Wash The $350 Antonio spends to purchase tax services from A-Plus Accountants

Answer 1

Based on this model, households earn income when Firms purchases factors of production ( Land Labor, Capital ) in factor markets.

Event 1 takes place in factor market because Antonio earns $500 per week in exchange for his labor.

Event 2 occurs in factor market because Caroline earns money in exchange for her labor.

Event 3 occurs in product market because gets car service in exchange for money.

Flow of households to firm :

Caroline's labor - flow of input from household to firm

The $350 Antonio spends to purchase tax services from A-plus accountants : flow of dollars from household to firm.