Question

Are firms primarily buyers or sellers in the goods and services market? In the labor market?

Short answer

Firms will mainly become a seller on the market for goods and services and they are going to become purchasers in the manufacturing sector.

Step-by-step solution

Definition

A firm is an economic agent that operates with the motive to make a profit. A firm can also be a partnership, a privately held company, a legal entity, a sole proprietorship, or an association having items or services to sell. In most cases, some form of skilled assistance is required. For IRS purposes, however, a company is run by the same management and has the same employer identification.

Explanation

A firm can be defined as any business entity that operates for profit. It can refer to a variety of company structures, such as single proprietorships and corporations. A firm can be a physical product-oriented business, such as a consumer goods store.

In tha labor market, firms act as buyers of labor services. The labor bought in this market is then used along with other inputs to produce goods and services. These goods and services are then sold by the firms in the goods market to earn profits.

So, firms are sellers in goods market but buyers in labor market.