In a competitive market, the product market is the place where:

• A. firms buy factors of production from households
• B. firms sell resources to other firms
• C. households purchase goods and services from firms
• D. the government sets prices for all goods

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of a product market in microeconomics. The product market is where final goods and services are bought and sold.
2. Step 2: Identify the roles of households and firms in the product market. Households are typically buyers (consumers) of goods and services, while firms are sellers (producers) of these goods and services.
3. Step 3: Recognize that the factor market is different from the product market. In the factor market, firms buy factors of production (like labor, capital) from households.
4. Step 4: Eliminate incorrect options by matching them to the correct market. For example, firms selling resources to other firms is not the product market; it relates more to intermediate goods or factor markets.
5. Step 5: Conclude that the product market is the place where households purchase goods and services from firms, which aligns with the correct answer.