Suppose Kate earns $875 per week working as jewelry appraiser for Classy\'s Jewe
ID: 1132308 • Letter: S
Question
Suppose Kate earns $875 per week working as jewelry appraiser for Classy's Jewelry Store. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Hubert $450 per week to work the cash register. Hubert uses $325 to purchase necklace from Classy's Jewelry Store.
Identify whether each of the following events in this scenario occurs in the factor market or the product market.
Event
Factor Market
Product Market
Identify questions, 1,2, and 3 as Factor market or Product market.
Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply.
The $325 Hubert spends to purchase necklace from Classy's Jewelry Store
Kate's labor
The aspirin Kate receives
The $450 per week Hubert earns working for Pillmart Pharmacy
Event
Factor Market
Product Market
1). Hubert earns $450 per week working for Pillmart Pharmacy. 2). Kate earns $875 per week working for Classy's Jewelry Store. 3). Hubert spends $325 to purchase necklace from Classy's Jewelry Store.Explanation / Answer
1). Hubert earns $450 per week working for Pillmart Pharmacy.
The event will occur in the factor market with Hubert offering his factor services as employee to Pillmart Pharmacy
2). Kate earns $875 per week working for Classy's Jewelry Store.
The event will occur in the factor market with Late offering his factor services as employee to Jewelry Store
3). Hubert spends $325 to purchase necklace from Classy's Jewelry Store.
The event will occur in the product market with Hubert buying goods from the product market.
The $325 Hubert spends to purchase necklace from Classy's Jewelry Store represents flow of dollars from households to the firm in terms of expenditure incurred of products.
Kate's Labor will be flow of factor services or inputs from households to firm and the earning in turn will be the factor payments and flow of dollars from firms to households.
The earning of hubert again will be factor payments or flow of dollars from firms to households
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