Explain any four ways in which household play an important role in the economy
Answers
Answer:
Households - All those people living under one roof are considered a household.
Households do two fundamental things vital to the economy.
1. Demand goods and services from product markets
2. Supply labour, capital, land, and entrepreneurial ability to resource markets.
Economists think of each household acts as a single decision-maker.
Householder: The key decision-maker in the household.
Answer:
Households are sellers in the market for resources. Households sell land, labor, capital, and entrepreneurial activity in exchange for money, which in this case is called income. Households are buyers in the market for goods and services. Households exchange income for goods and services.Households supply factor services to the firm and spend their entire income on the consumption of goods and services produced by the firms. Households make consumption decisions and own factors of production. They provide firms with factor services in production, and buy finished goods from firms for consumption. The government collects taxes from households, buys goods from firms, and distributes those goods to households individually or collectively.