Question

Jasmeen works as a rental agent for Eurocar, earning $ 800 a week. She has set up an automatic $40 withdrawal each week to pay for her gym membership at Club16. Club16 pays Mike $70 to teach a weekly kickbox-cardio class. Next week, Mike plans to spend $200 on a rental car from Eurocar to visit his Uncle in Chilliwack.

1. Which of the event in this case scenario occur in the factor market?
2. Which of the events in this case scenario occur in the product market?

Answer 1

Factor market include payment of factors of production like wages or salary to employees for their work.

Product market include payment made by consumer to use or consume a particular good or service.

a. In the above scenario, Payment made to Mike for his services to teach a weekly class is like a wage Mike get for providing its services so it is occur in factor market. Also Jasmeen works as a rental agent for Eurocar, earning $ 800 a week is a wage paid to Jasmeen for her services so it is also occur in factor market.

b. The payment of $40 by Jasmeen for gym membership and Mike's expenditure of $200 on rental car are the events in this case scenario occur in the product market.