A Distinguish Among Types of Markets

Question 1

Markets for Factors of Production (raw materials, goods and services used in production)

Answer 1

Firms buy

Households sell

Question 2

Markets for final goods, products and services to consumers

Answer 2

Firms produce and sell

Households and other firms consume

Goods and services used in the production of final goods and services are referred to as intermediate goods.

Services are finished goods

Question 3

Labor markets

Answer 3

Where households offer to sell their labor for payment in excess of the opportunity cost to forego leisure.

Question 4

Capital markets

Answer 4

Markets for long-term financial capital (claims on firms assets and cash flows) to sell debt or equity in order to earn a return on investment that will increase the value of the firm by more than the cost of acquiring those funds from households.

Capital Markets: Where firms raise money by selling and trading debt and equities

Question 5

Intermediate Goods

Answer 5

Engines are considered intermediate because theyre used in car (a finished good) production

unlikely to be considered finished goods because their primary use is in the production of cars (final good) that are driven by engines.

Intermediate goods are used in the production of finished goods

Question 6

Labor

Answer 6

While some part of the labor market is dedicated to providing services, labor is generally viewed as a factor of production.