In the paper a flexible FHM approach is estimated to model price responses of farm households under imperfect labor markets. In contrast to former studies the model explicitly incorporates simultaneously fixed and variable transaction costs as well as heterogeneity. Main results are: (i) In the general approach non-separability not only occurs if households are autarkic, but also when households participate in labor markets. (ii) Under imperfect labor markets, price responses are ambiguous and differ for the non-separable and separable model. However, econometric analysis indicates only moderate differences between the two models except for crop production for which an inverse supply response is estimated.