a change in demand but the magnitude of the change. That is, the manager must know how much to alter a resource's use if its price changes. Determinants of PERD The price elasticity of resource demand is the percentage change in the demand for a resource in response to a 1% change in the price of the resource. PERD for a resource depends on: The PED of the product that the input is used to produce - The higher the PED for the product, the higher the PERD for the resource. Coca-Cola has a relatively high PED. If the price of Coca-Cola rises, this will induce a substantial decline in the quantity of Coca-Cola demanded. The decline in quantity demanded for Coca-Cola will reduce the demand for all inputs used in the production of Coke. The importance of factor in production process - The more important the factor, the less elastic is the PERD. The number of substitutes for the resource - The more substitutes, the higher the PERD. The time period - Time to discover other resources. The more time to adjust the higher the PERD. The rate of decline of the MPP of the factor = The more rapidly the MPP declines, the more elastic the demand for the factor. Resource supply Resources are supplied to the market by resource owners. The market supply curve is the summation of individual supply curves. The resource supply curve is similar to the products supply curve. The market supply curve is the summation of individual supply curves and is upward sloping. It shows the relationship between the resource price and the quantity of the resource that resource providers are willing to sell and able to sell. The price paid for any factor of production is equal to the marginal production of that factor. The marginal production of any factor depends on the amount of that factor that is available. Due to diminishing marginal production, the marginal production of a factor that is in abundant supply is low, and hence the price is low, while the marginal production of a factor that is in scarce supply is high, and hence the price is high. Thus, when the supply of a factor decreases, its equilibrium price rises. Factors that will cause a shift in the factor supply curve include changes in tastes, number of suppliers and the prices of related resources. Factors that