Factor Payment

Factor payments refer to the income earned by the factors of production, which are resources used to create goods and services. These factors include land, labor, capital, and entrepreneurship. For example, landowners receive rent, workers earn wages, investors gain profits, and entrepreneurs receive returns on their business ventures. Essentially, factor payments are the rewards for contributing to the production process, reflecting the value of resources provided to the economy. This concept helps to understand how income is distributed among individuals and organizations based on their roles in producing goods and services.