Chapter 3, Problem 1.4P

To determine

The assumed objectives of households, firms, and the government in an economic analysis.

Introduction:

Households play a significant role in a market economy. The households provide the demand for goods and services in the economy. They also provide the resources for production like land (resources), labor, and capital. A firm can be in the form of sole proprietorship, partnership firm, or a corporation. The basic task of such typical firm is to produce or supply goods, or provide services. The government is a legal body at various levels of an economy who manage the working of an economy and follow different objectives at different levels..