In what respect do the supply and demand curves in the labour market differ from those in the goods market?
The supply and demand curves in the labour market differ from those in the goods market with respect to the source of supply and demand. In the labour market, households are the suppliers of labour and the demand for labour comes from firms. However, in the goods market, it is the opposite — firms are the suppliers of goods and the demand comes from households.
Thus, the roles of households and firms are reversed in the two markets. While households act as sellers in the labour market, they act as buyers in the goods market. Similarly, firms act as buyers in the labour market and sellers in the goods market.
Explanation
The textbook clearly states that 'the basic difference between a labour market and a market for goods is with respect to the source of supply and demand.' This is a fundamental conceptual difference that students must understand. The answer directly addresses the 3-mark requirement by explaining the reversal of roles between households and firms in the two markets.