 How businesses maximize profits by choosing how much of each economic resource to use
 The demand for resources by businesses that are price-takers and price-makers in the markets in which they sell their products
 The supply of labour, how wage rates are determined, and labour market equilibrium
 Factors that change resource demand
 Price elasticity of resource demand and the factors that determine it

Wage: the amount earned by a worker for providing labour for a certain period of time; sometimes know as salary
The Demand for Resources:
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It depends on the demand of the final goods and services
Marginal productivity theory:
The theory that businesses use resources based on how much extra profit these resources provide

Marginal Product:
 The change in output by adding/changing in input (worker) while all other factors remain constant
Marginal revenue product: (MRP)
 the change in total revenue associated with employing each new unit of a resource
Labour demand and supply:
 Marginal resource cost: (MRC) the extra cost of each additional unit of resource

Business’s labour demand curve:
 a graph showing the possible combinations of workers demanded by a business at each possible wage
Business’s labour supply curve:
 a graph showing the possible combinations of workers supplied to a business at each possible wage
Profit-maximizing Employment Rule:
 states that a business should use a resource up to the point where the resource’s marginal revenue product equals its marginal resource cost
Profit-Maximizing employment rule: MRP = MRC

Labour market demand curve:
 A graph showing the possible combinations of workers demanded in a certain labour market at each possible wage
Labour market supply curve:
 A graph showing the possible combinations of workers supplying their labour in a certain labour market at each possible wage

 Product Demand
 Other Resource Prices
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Complementary Resources: resources that are used together
Labour Productivity: the quantity of output produced per worker in a given period of time; the average product of labour
Substitute Resources: resources that can be used in place of one another without affecting output
 Technological Innovation
 Increase productivity

1.
Rate of Decline in Marginal Product
2.
Price Elasticity of Product Demand
3.
Proportion of Total Costs
4.
Substitute Resources