Answer to Question #74089 in Economics of Enterprise for Vanessa

Question

We were assigned the running in place project and one of the questions our teacher asked was “Why shouldn’t I just buy the products from other businesses instead of paying households?”

Answer 1

In case of a person purchase products from the marketplace (businesses), every cent of his payment distributes to workers in terms of wages, owners in terms of profits, landlord in terms of rents, and the government in terms of taxes. On the other hand, the whole payment remains to household in case of purchasing products from households. To benefit entire society, it is good to buy goods from the marketplace rather than households.