A. On the supply side of factor markets and the demand side of goods markets. B. On the demand side of both factor markets and goods markets. C. On the demand side of factor markets and the supply side of goods markets. D. On the supply side of both factor markets and goods markets.
Households lie on the supply side of factor markets and the demand side of goods markets. Economic activity in a market economy is based on the free flow of products and resources in free markets. The product market represents the purchases of finished goods and services in an economy. Households are the main buyers of goods and services in the product market, and businesses are the sellers of goods and services. The factor market, sometimes called the resource market, represents the purchase of resources in an economy. In the factor market, households are the sellers of resources, and business firms are the buyers of resources.