| What is the difference between a 'Product Market' and a ?Factor Market'? |
| 1. The demand for product is a direct demand, whereas factors have a derived demand. |
| 2. The price of the product is determined by the interaction of demand and supply of product where as the price of factors is determined by the interaction of demand and supply of the factors. Select the correct answer using the codes given below: |
A) 1 only
B) 2 only
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: C
Solution :
[c] The main differences between Product Market and Factor Market are as follows: Product Market: A product refers to an arrangement for buying and selling of commodities. The examples of product market are Rice market. Fish market, etc. In the product market the households are the buyer. The demand for product is a direct demand. The price of the product is determined by the interaction of demand and supply of product. This market facilitates exchange of goods and services in the society. Factor Market: It refers to arrangement for buying and selling of factors of production. The examples of factor market is labor market. They have a derived demand. The price of factors is determined by the interaction of demand and supply of the factors. The market facilitates the distribution of income to the factors of production.
You need to login to perform this action.
You will be redirected in
3 sec
