page_title: Factor payments
section_title: Factor prices
hierarchical_section_title: Factor payments / Factor prices
caption_attribution_description: English: factor prices are denoted on y axis quantity of factor on x axis
context_page_description: In economics, factor payments are the income people receive for supplying the factors of production: land, labor, capital or entrepreneurship.
  Payments made of scarce resources, or the factors of production in return for productive services. They are also categorized according to the services of the productive resources being rewarded. As wages are being paid for services of labor, interest is paid for the services of capital, rent is paid for the services provided by the land or other immovable assets and profit is for the factor of payment to entrepreneurship.
  An economy is dependent on the production of goods and services, hence factors of production are required for the production of goods and services. They are broadly divided in the three factors of production: land, labor, and capital. Land is the primary factor of production. Labor is the specific factor of production and payment is made in the form of wage. Capital is regarded as secondary factor of production as it can be manipulated by economic activity. Payment received would be in the form of interest. Later Entrepreneurship was added as the fourth factor of production. It earns profit to the entrepreneur.
context_section_description: Distribution of national income is determined by factor payments (factor prices). Factor payments include rent, wages, interest and profit. The prices for factor of production depends upon demand and supply of that particular factor of production. Assume that the factors of production in the economy are fixed and hence the factor supply curve is vertical. Equilibrium of factor payments is determined by the intersection of the downward-sloping factor demand curve and the vertical supply curve. The optimal factor payments are determined through their respective markets i.e. the market clearing prices of the factors of production. There are three major factor of production Land, Labor, Capital.
caption: The optimal price for the factor of production is determined by the demand and supply of factor of production.
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