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FACTOR PAYMENT: A wage, interest, rent, and profit payment for the services of scarce resources, or the factors of production (labor, capital, land, and entrepreneurship), in return for productive services. Factor payments are frequently categorized according to the services of the productive resource. Wages are paid for the services of labor, interest is the payment for the services of capital, rent is the services for land, and profit is the factor payment to entrepreneurship. In the circular flow, these are payments made by the business sector for factor services purchased from the household sector through the financial markets.
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Lesson 21: Factor Demand | Unit 4: Determinants
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Page: 19 of 24
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Topic:
Factor Productivity
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- The factor demand curve presented in this diagram was derived based on a particular factor productivity.
- Increase In Factor Productivity:
Suppose that the firm replaces all of its old machines with newer, state of the art equipment. - The result is a rightward shift of the factor demand curve.
- Decrease In Factor Productivity: While technology doesn't generally decline, the wear and tear on existing capital equipment can have the same effect as a technological decline.
- The result is a leftward shift of the factor demand curve.
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INVESTMENT The sacrifice of current benefits or rewards to pursue an activity with expectations of greater future benefits or rewards. Investment is the mechanism used to increase the economy's production capabilities and generate economic growth. Investment is typically used to mean the purchase of capital by business in anticipation of profit, which is termed investment expenditures.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites trying to buy either a T-shirt commemorating the 2000 Olympics or a genuine fake plastic Tiffany lamp. Be on the lookout for cardboard boxes.
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Paper money used by the Commonwealth of Massachusetts prior to the U.S. Revolutionary War, which was issued against the dictates of Britain, was designed by patriot and silversmith, Paul Revere.
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"It is not the straining for great things that is most effective; it is the doing of the little things, the common duties, a little better and better." -- Elizabeth Stuart Phelps, Writer
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AIBD
Association of International Bond Dealers (now called International Securities Market Association)
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