Factor payment

Factor Payment

1. FACTOR PAYMENT PRESENTATION BY :MEGHANA S NAYAK GUIDED BY :MERVIN FELIX CALEB

2. introduction Factor Payment are the income people receive for supplying the factors of production: land, labor, capital or entrepreneurship. Payment made of scarce resources, or the factors of production in return for productive services.

3. Definition A wage, interest , rent and profit payment for services of scarce resources , or the factors of production ( labor , capital , land and entrepreneurship ) , in return for productive services.

4. Four Factor payment WAGE : Wages are paid for the services of labor. INTEREST : Interest is the payment for the services of the capital. RENT : Rent is the services for land PROFIT : Profit is the factor payment to entrepreneurship.

5. Circular Flow model The role that factor payments play in the macro economy can be illustrated by the circular flow model. The circular flow captures the continuous movements of production, consumption, income and factor payments between producers and consumers .

6. The Circular flow

7. factor price Factor Price is the unit cost of using a factor of production , such as labor or physical capital. The prices for factor of production depends upon demand and supply of that particular factor of production.

8. How to calculate Factor Payment ? Factor Payment = P = Payment r = rate per period n = number of periods  

9. How is annuity payment Factor Derived ? P = PV = Present Value r = rate per period n = number of periods  

10. Conclusion Factor Payment are the flow between the business sector and the resource markets. In particular , the business sector uses the revenue it receives from the sale of gross domestic product to pay for the services of the factors of production .

11. References O’Sullivan,Arthur,Sheffrin , Steven M (2003) Factor Payments AmosWEB. Mankiw, Gregory (2007). Macroeconomics. http://www.amosweb.com/cgi-bin/awb-nav.pl?s=gls&c=dsp&k=factor+payment Jhingan M.L(2009). Micro Economic Theory, Vrinda publications.

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