1984-11-01 — Page 23

incomes consist of. four elements:

A. Rent is the payment.

to land.

payment paid by the

firm to the skilled ur unskilled, physical. or:mental. labour for

D. Profit:

育教僑華頁三第張六第

1985

日九初月十年子甲歷夏

WAH KIU YAT PO

報日僑

中學會考試題預習專欄

:

經濟

(六)

C.

明德出版社

王啓光土 陳勵德

【提供資料

ECONOMICS (6)

K. WONG & L.T. CHAN.

MILL & DALE PRESS LTD.

Factors of production

con't)

Heturns to factor's of production.

Land, capital, labour and entre- preneurship are the. productive resources available to produce commodities. They are. the factor services provided by the owners. of factories of production. Payments are made to the owners of the factors input

n return for the services they rende: These amount of payments are called factor incomes in economics. Factor income refers to payment which is paid

the

by the producers for

the employment of each unit of factor

service. The factor

光新

i. wages are the

rayment.ta labour. Interest is the payment to capital Profit is the Payment to

entrepreneur.

Rent:

To the payment,

refers to price rent paid per unit of time for the services of: some durable.

e goods" such as the rent of a car, a flat, television set, etc. Under the alone

condition the payment is called. commerical

rent.

To the economist, rent refers to the: payment for the productive factor which is fixed in

supply. It is because rent is the payment: to land in production, Land is not only defined as the produc... tion site but it is also regarded as the natural resources involved in produc- tion which is fixed in supply

Wages are the

the effort they hav好 made in production.

"ime rate.means that the workers are paid according to the period of time they work for producing

or services. Piece rate means that the workers are paid according to the amount of goods and services they have produced.

Interest:

Interest refers to the payment paid by the: producer for the use of capi tą and it is the rate of return

the capital in invested

ΟΠ

Since sume of the money.capital may be borrowed from money lenders, interest, is also regarded as the payment by a borrower for the use ́of money fon a fixed period of time..

..sum

If the payment is completely for the use of money. It is called pure interest. Usually, interest is

the payment for the risk involved in making loans.

四期星

· Profit refers to the income accures to entrepreneur. It is the reward given for the performance of the managerial skill and the organization of the firm. addition, profit also refers to the reward to the risk bearing and business decision making; in a

mamfactoring unit.

Since entrepreneur is the one who

organizes the other three factors of production:and

supplies the capital of the fire, profit' is the amount that. remains after the reward::coall other factors af production. 11.Determination of rent, wages, interest and profit. In market economy, the prices. of. productive factors are determined in the factor markets through price mechanism. In other words factor incomes, just like the prices of other commodities, are determined by the interaction between demand and supply of

the factorsi

the

The market demand of

a factor of

日一月一十年四八九一曆公年三十七國民華中

production,

for

example, the market: demand of capite!

is

the aggregation of the demand.. curves of the individual firios.

The demand for factor production iu

an

individual firm will depaud upon:

the physical productivity of the factor

If the produc- tivity of the factor input is improved. tlie demand for the factor would be increased, For: instance, the productivity of.a machinery can be improved through technical progress or managerial know- hows..

the price of the product which the firm is producing

The demand for factor input would be increased.

resulting from the rise of the price of the goods which is manufactoring, the prices of other factor services employed by the firm

The fira may

employ several

variable factors in short rùn

production. Factor

input are mobile' so that the price of other factors can influence the price of the factor to

some extent...

The supply of the factor: means the amount which is offered as the reward is varied. Because factors of production would be attracted from other industries and occupation, for example, the supply of work force. should expect a higher price to: expand supply.

w想

For the same taken, wore supply of dand would be expected due, to rise of rent, and profit is the incen- tive which stimulate the entrepreneur to make:musi effort in : production.

The prices of factors of production such as rent, wages, interest and profit, are st determined by the interaction of the market demand curve and the market supply curve of the factors. of production as

shown in the follow-

ing diagram.

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