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.

2. There are two parts to the initial discussion of resource markets. The first is the distinction between temporary and permanent resource price differentials, and the second is the distinction between opportunity cost and economic rent. A good example of the first is the case of an unemployed plumber who is offered a job in another state. Whether he or she takes the job depends on whether the differential in wages between the two states is sufficiently high. If the wage differential is too low, the plumber will stay put. This means that the differential is permanent because it does not result in a reallocation of resources. If the plumber decides to move to take the job, the differential can be considered temporary.

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