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Chapter 4: Q14 (page 104)

Are households demanders or suppliers in the goods market? Are firms demanders or suppliers in the goods market? What about the labor market and the financial market?

Short Answer

Expert verified

Goods Market : Demanders - Households ; Suppliers - Firms. Labor Market : Demanders - Firms ; Suppliers - Workers. Financial Market : Demanders - Borrowers ; Suppliers - Lenders

Step by step solution

01

Basic Definitions

Demanders are people who are able and willing to buy a good or service at a price.

Suppliers are people who are able & willing to sell a good or service at a price.

02

Detail Explanation 

In goods market - demanders (buyers) of goods, & services are households & suppliers (sellers) are firms.

In labor market - demanders (buyers) of productive services are firms, & their suppliers (sellers) are workers.

In financial markets - demanders (buyers) of loans are borrowers, & their suppliers (sellers) are lenders.

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Most popular questions from this chapter

Other than the demand for labor, what would be

another example of a 鈥渄erived demand?鈥�

In the financial market, what causes a movement along the demand curve? What causes a shift in the demand?

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.

a. The number of people at the most common ages for home-buying increases.

b. People gain confidence that the economy is growing and that their jobs are secure.

c. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans.

d. Because of a threat of a war, people become uncertain about their economic future.

e. The overall level of saving in the economy diminishes.

f. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.

During a discussion several years ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating that there should be a guaranteed minimum price for the natural gas that would flow through the pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline.

a. Using the demand and supply framework, predict the effects of this price floor on the price, quantity demanded, and quantity supplied.

b. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in the market?

c. Suggest some policies other than the price floor that the government can pursue if it wishes to encourage drilling for natural gas and for a new pipeline in Alaska.

Other than the demand for labor, what would be another example of a 鈥渄erived demand?鈥�
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