What is the difference between resource markets and product markets in a circular flow model?
The difference between a resource market and product market within a circular flow model is actually defined in the name of both. In the resource market, that is where resources are obtained in order to produce or manufacture a certain good. Resources can range from anything from natural resources, to human labor, to capital, and even technology. Resources are what is necessary to begin creating a product and ultimately manufacturing and finishing it.
The product market however, is where the produced goods are after being completed. When a good is produced, it will move over to the product market to be bought and sold to consumers by sellers or manufacturers.
This will be easier to understand with an example. For instance, say we want to sell a product. Let's look at how Apple sells it's Macbooks. Before landing in the hands of a consumer, Apple needs to gain the resources in order to create the laptop. Thus, they will gather engineers, technicians, computer parts, the technology that goes into the Macbook, and the other needs that they may find they require. After gathering all the resources, it goes into production until it is finished and ready to be sold. Once it is, it will be placed on the market for a consumer to buy and for Apple to profit off.
This is what is meant by the resource and product market within a circular flow model.
The basic difference between these two is that the resource market is the market for things that are used to make other things while the product market is the market for the things that are produced. The resource market, for example, includes the labor that is used to make cars but also the glass and the steel and the other things that go into the actual car. The product market, then, is the market in which the cars are sold to consumers.
So, product markets are the ones where goods and services are bought and sold. Resource markets is where businesses buy the things that they need in order to produce the goods and services.