Market_Resources

Market Resources RESOURCE MARKETS INTRODUCTION This chapter provides an overview of resource markets, giving special attention given to the labor market. The intent is to show that the basic decision about how much of a resource to supply or demand is relatively straightforward. Such decisions are made every day by billions of economic decision makers, most of whom have never taken an economics course. This chapter serves as an introduction to the following chapters, which examine specific resources. CHAPTER OUTLINE The Once Over Resource Demand: A firm demands additional units of a resource as long as the marginal revenue generated by that additional unit exceeds its marginal cost. Resource Supply: resource owners supply their resources to the highest-paying alternative, other things equal. The Demand and Supply of Resources: Differences between the profit-maximizing goals of firms and utility-maximizing goals of households are reconciled through voluntary exchange in markets. The Market Demand for Resources: The demand for a resource is derived from the demand for the product the resource produces. The Market Supply for Resources: Resource suppliers are more willing and more able to supply the resource as its price increases. Temporary and Permanent Resource Price Differences: If resources are mobile, they seek their highest valued use; prices across resource, marginal, demand, product, resources, revenue, cost, price, supply, output, economic, differences, rent, opportunity, earnings, curve, markets, market, chapter, firm, produce, permanent, unit, things, prices, households, equals, costs, between, because, additional, total, job, firms, derived