tailieunhanh - Ebook Macroeconomics (13th edition): Part 2

(BQ) Part 2 book "Macroeconomics - Private and public choice" hass contents: Money and the banking system, stabilization policy, output, and employment; stabilization policy, output, and employment; gaining from international trade; international finance and the foreign exchange market,.and other contents. | 12 C H A P T E R The Supply of and Demand for Productive Resources C H A P T E R F O C U S ● ● How do business firms decide which resources to employ and the quantity of each that will be used? ● How is the quantity supplied of a resource related to its price in the short run? In the long run? ● 1 Why do business firms demand labor, machines, and other resources? Why is the demand for a productive resource inversely related to its price? What determines the market price of a resource? How do resource prices help a society allocate its resources efficiently among competing uses? James E. Meade was a longtime professor of economics at Cambridge University. It is . . . necessary to attach price tags to the various factors of production . . . in order to guide those who have the day-to-day decisions to make as to what is plentiful and what is scarce. —James Meade 1 R ecent chapters have focused on product markets, markets in which consumers purchase goods and services supplied by business firms. Our analysis now shifts to resource markets, markets in which firms hire productive resources like machines and workers and use them to produce goods and services. (Note: Because resources are also referred to as factors or inputs, these markets are also known as factor markets or input markets.) As in product markets, the forces of supply and demand combine to determine prices in resource markets. The buyers and sellers in resource markets are just the reverse of what they are in product markets. In resource markets, business firms are the purchasers; they demand resources used to produce goods and services. Households are the sellers; they (and firms they own) supply resources in exchange for income. The income from supplying productive resources, like the wages received from the sale of labor services, is the major source of income for most of us. Prices in resource markets coordinate the choices of buyers and sellers and bring the amount of each resource .