Factor cost has the following uses in economics:
- Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. This allows the effect of any subsidy or indirect tax to be removed from the final measure.
- Factor cost can also refer to the unit cost of a particular factor of production (input in the production process), such as the wage rate or the rental rate of capital.
- Factor Cost or Factor Income are the incomes received by the owners of the production (the households) for rendering their factor services to the producers. Corresponding to the real flow of factor services from the households to the producers, there is a money flow from the producers to the households in the form of rent,interest,profit and wages. As a consequences of these flows, there is a production of goods and services in the economy.
Famous quotes containing the words factor and/or cost:
“Weapons are an important factor in war, but not the decisive factor; it is people, not things, that are decisive. The contest of strength is not only a contest of military and economic power, but also a contest of human power and morale. Military and economic power is necessarily wielded by people.”
—Mao Zedong (1893–1976)
“It breedeth no small offence and scandal to see and consider upon the one part the curiosity and cost bestowed by all sorts of men upon their private houses; and on the other part the unclean and negligent order and spare keeping of the houses of prayer by permitting open decays and ruins of coverings of walls and windows, and by appointing unmeet and unseemly tables with foul cloths for the communion of the sacrament.”
—Elizabeth I (1533–1603)