What role do households play in the market for inputs? What role do firms play?
What will be an ideal response?
In the market for inputs, households are the suppliers. They sell their labor services in the labor market to firms who demand labor to produce their products. Owners of land sell or rent their land to firms for production purposes. Households supply their savings to financial markets so that firms are able to buy capital.
You might also like to view...
Use the figure below, and the regular percentage change formula, to answer the following question: 
Assume that price decreases from $10 to $2. The price elasticity of supply is about
A. 0.35 and supply is inelastic. B. 1 and supply is unit-elastic C. 4 and supply is elastic. D. 1.25 and supply is elastic.
Resource use is allocatively efficient when
A) we produce the goods with the highest opportunity cost. B) we produce the goods with the lowest opportunity cost. C) we cannot produce more goods and services. D) we produce the amount of the different goods we value most highly.
A consumer spends his income on food and rent. The government places a $1 tax on food. To restore the pre-tax consumption level of food the rebate paid to consumers will be smallest when
A) the own price elasticity of demand for food is 2, and the income elasticity of demand for food is 5. B) the own price elasticity of demand for food is 5, and the income elasticity of demand for food is 5. C) the own price elasticity of demand for food is 2, and the income elasticity of demand for food is 10. D) the own price elasticity of demand for food is 5, and the income elasticity of demand for food is 10.
If the government undertakes expansionary fiscal policy, it:
A. could increase income taxes. B. expects aggregate demand to increase. C. expects aggregate demand to decrease. D. should force people to change their spending patterns.