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FACTOR DEMAND AND MARGINAL REVENUE PRODUCT: For a firm that hires the services of a factor in a perfectly competitive factor market, the factor demand curve is that portion of the marginal revenue product curve that lies below the average revenue product curve. The relation between marginal revenue product and factor demand for a perfectly competitive firm is comparable to the relation between marginal cost and short-run supply. A perfectly competitive firm maximizes profit by hiring the quantity of a factor that equates factor price and marginal revenue product. As such, the firm moves along it's marginal revenue product curve in response to alternative factor prices.
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                           IN-KIND PAYMENTS: A payment, usually in exchange for the productive efforts of resources, that takes the form of goods and services produced by the resource buyer rather than the economy's standard monetary unit (that is, dollars). In other words, resource owners are compensated with a portion of the output that they help to produce. The standard method of compensation, which is illustrated by the circular flow model, is for a firm to pay resource owners using money revenue received from selling its production. Hence most factor payments are monetary payments. However, in some circumstances firms and resource owners find it more convenient to use actual production for compensation, eliminating the sell-production-for-money step. In-kind payments are noteworthy when the topic turns to measuring gross domestic product. The number crunchers responsible for measuring gross domestic product at the Bureau of Economic Analysis make a special effort to include ALL production--the vast majority sold in markets, as well as the smaller portion used to compensate resource owners as in-kind payments.In Lieu of MoneyIn-kind payments are common in a wide assortment of industries. Farming and agricultural production are perhaps the most notable. Farmers often find it easy to pay their workers with crops produced. Come harvest time, the farmhands might receive a portion of the bounty. Service industries are also prone to in-kind payments. A dentist, for example, might provide employees with dental care. An accountant might prepare income tax returns for employees. Retail stores also use in-kind payments in lieu of higher monetary wages. Restaurants often provide meals to their employees. Clothing stores let employees purchase goods at reduced prices.Edgar Loves TacosTo illustrate how in-kind payment is used as compensation for productive activity, consider the circumstance of Edgar Millbottom, a dedicated employee of Waldo's TexMex Taco World. The primary output of Waldo's TexMex Taco World is, of course, the highly popular Super Deluxe TexMex Gargantuan Taco (with sour cream and jalapenos). The standard operating procedure for Waldo's TexMex Taco World is to sell Super Deluxe TexMex Gargantuan Tacos to taco-hungry customers, then use the revenue collected from taco sales (about $2 each) to compensate owners of the resources used to fabricate Gargantuan Tacos, including the star of this story, Edgar Millbottom.However, Edgar is not only an employee, he is also a Gargantuan Taco lover. Even before his employment at Waldo's TexMex Taco World, Edgar was known to consume large numbers of Gargantuan Tacos morning, noon, and night for months on end. As such, when Edgar was hired by Waldo's TexMex Taco World he agreed to less monetary compensation (that is, a lower hourly wage) with the difference made up in Gargantuan Tacos. Edgar is happy. And Waldo's TexMex Taco World is indifferent. They do not care if they sell tacos, collect revenue, then pay Edgar a monetary wage, or directly use the tacos to pay Edgar. The bottom line for them is the same in either case.
Recommended Citation:IN-KIND PAYMENTS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 19, 2018].
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Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either a T-shirt commemorating the 2000 Olympics or a genuine fake plastic Tiffany lamp. Be on the lookout for high interest rates.
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Junk bonds are so called because they have a better than 50% chance of default, carrying a Standard & Poor's rating of CC or lower.
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"Think not of yourself as the architect of your career but as the sculptor. Expect to have to do a lot of hard hammering and chiseling and scraping and polishing. " -- B. C. Forbes, founder, Forbes magazine
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CES
Constant Elasticity of Substitution
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