◆ FIRMS & MARKETS
Factor Markets
Capital, land, interest rates, economic rent, and entrepreneurship.
8 articles
FeaturedPresent 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 →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
The Rental Price of Capital: How Interest Rates Decide What Gets Built
The interest rate is the rent on capital. Here is the net-present-value logic firms use to decide what to build, and why the Fed's moves reach every project.
◆ 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
Profit, Uncertainty, and Why Entrepreneurs Earn What They Earn
Schumpeter saw the entrepreneur as capitalism's engine. Knight explained why they earn profit. Together they answer what economics struggled with for a century.
◆ 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.