Question
Based on this model, households earn income when purchase in factor markets.Suppose Maria earns $575 per week working as an interior designer for Ourhouse. She uses $10 to take a spin class at Silver’s Gym. Silver’s Gym pays Kevin $300 per week to work as a trainer. Kevin uses $225 to purchase furniture from Ourhouse.
Identify whether each of the following events in this scenario occurs in the factor market or the product market.
Event
Factor Market
Product Market
Kevin spends $225 to purchase furniture from Ourhouse.
Maria earns $575 per week working for Ourhouse.
Maria spends $10 to take a spin class.
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.
Maria’s labor
The $300 per week Kevin earns working for Silver’s Gym
The $225 Kevin spends to purchase furniture from Ourhouse
The spin class Maria receives
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