In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
In the figure,
D: Demand curve for automobiles
S 1 : Supply curve of automobiles prior to regulation
S 2 : Supply curve of automobiles after regulation
FG: Clean up cost per unit
-The resource market is the same as the product market except that, in the resource market:
A)the demand curve slopes upward.
B)the households are the sellers and the firms are the buyers.
C)there is no substitution effect.
D)the supply curve is perfectly inelastic.
E)there is no income effect.

Question

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
  In the figure,
D: Demand curve for automobiles
S 1 : Supply curve of automobiles prior to regulation
S 2 : Supply curve of automobiles after regulation
FG: Clean up cost per unit
-The resource market is the same as the product market except that, in the resource market:
A)the demand curve slopes upward. 
B)the households are the sellers and the firms are the buyers. 
C)there is no substitution effect. 
D)the supply curve is perfectly inelastic. 
E)there is no income effect.

Quizplus · Accepted Answer

The resource market for automobiles would consist of the market for inputs such as steel, rubber, and labor. In this market, households would be the sellers of labor and the firms would be the buyers of labor and other inputs. Therefore, choice B is correct as it correctly identifies the buyers and sellers in the resource market. The other options are not applicable to the resource market.

In the Following Figure, the First Panel Shows a Market