Factor Markets
Capital, land, interest rates, economic rent, and entrepreneurship.
9 articles
FeaturedLand 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.
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4 articles
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.
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.
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.
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.
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4 termsThe 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.
Read more →Present 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 →Economic 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.
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