Question 20

Individuals sell their labor in factor markets.

The text describes how individuals, particularly veterans returning from military service, sought housing and employment after World War II. This scenario indicates that they were participating in labor markets by offering their skills and efforts to secure jobs, which aligns with the concept of selling labor in factor markets.

A) Individuals spend their income in factor markets.

This statement is incorrect as it misrepresents the role of income in factor markets. In factor markets, individuals typically provide their labor in exchange for income rather than spending that income. The text focuses on the labor aspect rather than expenditures in these markets.

B) Entrepreneurs profit from participation in product markets.

While this statement holds some truth regarding entrepreneurs, it does not specifically relate to the context of the text. The Levitt brothers’ success is primarily tied to their innovative construction methods and labor market dynamics rather than merely profiting from product markets.

C) Individuals sell their labor in factor markets.

This statement accurately reflects the text's emphasis on returning veterans and their need for employment, indicating their participation in the labor market. It highlights how they offered their skills to gain employment and secure housing, thereby linking directly to the concept of selling labor.

D) Resources are traded in product markets.

This statement is overly broad and does not accurately capture the specific dynamics discussed in the text. While resources can indeed be traded in product markets, the extract focuses more on labor and housing than on general resource trading.

Conclusion

Option C is the only statement that directly aligns with the text by emphasizing the role of individuals selling their labor in factor markets. All other options either misinterpret the context or do not specifically relate to the labor dynamics described, making C the definitive correct answer.