Which of the following occurs in the resource market?

• A. Households purchase finished products
• B. Firms sell goods to households
• C. Households sell labor to firms
• D. Governments set product prices

Answer: (C)

Verified step by step guidance

1. Understand the definition of the resource market: It is the market where factors of production (such as labor, land, and capital) are bought and sold.
2. Identify the roles of households and firms in the resource market: Households supply resources (like labor), and firms demand these resources to produce goods and services.
3. Analyze each option in the context of the resource market:
4. - 'Households purchase finished products' relates to the product market, not the resource market.
5. - 'Firms sell goods to households' also describes the product market.
6. - 'Households sell labor to firms' correctly describes the resource market, where labor is a resource supplied by households.
7. - 'Governments set product prices' pertains to government intervention in the product market, not the resource market.