◆ FIRMS & MARKETS
Factor Markets
Capital, land, interest rates, economic rent, and entrepreneurship.
9 articles
FeaturedEconomic Rent: Income That Exceeds What It Takes to Keep a Resource in Use
Economic rent is the payment to a factor of production above what is needed to keep it in its current use.
Read more →Deep Dives
5 articles
◆ FACTOR MARKETS
Capital as a Factor of Production: What It Is, How It's Priced, and Why It Matters
Capital is the produced means of production - tools, machines, buildings. Here is what counts as capital, how its rental price is set, and why it drives wages.
◆ FACTOR MARKETS
Interest Rates and the Rental Price of Capital: How Firms Decide What to Build
The interest rate is the rental price of capital - the hurdle every investment must clear. Here is the net-present-value math firms use to decide what to build.
◆ FACTOR MARKETS
Land and Economic Rent: Why Location Commands a Price Nobody Earned
Economic rent is the payment to a factor in fixed supply - classically land. Here is Ricardo's theory, the Henry George land tax, and why location pays.
◆ FACTOR MARKETS
The Entrepreneur as Economic Actor: Risk, Innovation, and the Theory of Profit
The entrepreneur is the factor of production economics struggled to place. Here is Schumpeter on innovation, Knight on uncertainty, and why they earn profit.
◆ FACTOR MARKETS
Profit as the Return to Risk: What Economic Profit Really Measures
Economic profit subtracts opportunity cost - including what your money and time could have earned elsewhere. Here is why it differs from accounting profit.
Quick Answers
3 termsPresent Value: What Future Money Is Worth Today
Present value converts a future cash flow into its equivalent value today using a discount rate.
Read more →The Entrepreneur: Risk-Bearer, Innovator, and Fourth Factor of Production
The entrepreneur is the factor of production responsible for combining other inputs, bearing risk, and innovating.
Read more →Physical vs. Financial Capital: Two Things Called "Capital" That Aren't the Same
Physical capital is produced equipment and infrastructure used in production. Financial capital is money used to fund investment.
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