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:
“Children of the middle years do not do their learning unaffected by attendant feelings of interest, boredom, success, failure, chagrin, joy, humiliation, pleasure, distress and delight. They are whole children responding in a total way, and what they feel is a constant factor that can be constructive or destructive in any learning situation.”
—Dorothy H. Cohen (20th century)
“[M]y conception of liberty does not permit an individual citizen or a group of citizens to commit acts of depredation against nature in such a way as to harm their neighbors and especially to harm the future generations of Americans. If many years ago we had had the necessary knowledge, and especially the necessary willingness on the part of the Federal Government, we would have saved a sum, a sum of money which has cost the taxpayers of America two billion dollars.”
—Franklin D. Roosevelt (1882–1945)