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FACTOR DEMAND CURVE: A graphical representation of the relationship between the price to a factor of production and quantity of the factor demanded, holding all ceteris paribus factor demand determinants constant. The factor demand curve is one half of the factor market. The other half is factor supply. The factor demand curve indicates the quantity of a factor that would be demanded at alternative factor prices. While all factors of production, or scarce resources, including labor, capital, land, and entrepreneurship, have factor demand curves, labor is the factor most often analyzed. Like other demand curves, the factor demand curve is negatively sloped. Higher factor prices are associated with smaller quantities demanded and lower factor prices go with larger quantities demanded.
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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: April 25, 2018].
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Today, you are likely to spend a great deal of time surfing the Internet trying to buy either a set of luggage without wheels or a how-to book on wine tasting. Be on the lookout for telephone calls from long-lost relatives.
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Woodrow Wilson's portrait adorned the $100,000 bill that was removed from circulation in 1929. Woodrow Wilson was removed from circulation in 1924.
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