Activities of any household And industrial enterprise based on the use of production factors and the receipt of corresponding income from this. In their work, therefore, these subjects use particularly important objects and elements that have a significant impact on the possibility and efficiency of functioning. Let us next consider the main types of factor income.

General information

In market conditions, the formation of factor income has a number of features. However, in general, the well-known mechanism of competitive price equilibrium operates in this process. The owner always owns one or another production resource. No entity will transfer the right to use them free of charge to other persons. IN last decades there is a tendency to increase resource costs. As a result, factor incomes also decrease. In the economy, this leads to changes in the behavior of companies and citizens, confronting them with the need to find substitutes for expensive resources, to look for ways to reduce production costs. Only entrepreneurs are in demand for funds. They belong to that part of society that can organize and implement the production of goods and services that are necessary for the end consumer.

Theoretical aspect

Manufacturing is the process by which spiritual or material goods are produced. To start it, you must have at least a performing entity and material to create a service or product. As production factors, Marxist theory identifies the means and subject of labor, as well as the labor force of people. At the same time, science divides them into two groups. The first includes the personal factor, and the second - the material factor. The first is presented in the form of labor as a set of spiritual and physical abilities person to work. The material factor is the means of production. The organization of an enterprise presupposes the coordinated interaction and functioning of these elements. According to Marxist theory, the interrelation of factors and the characteristics of their combination determine the class composition in society, relations between public associations and the social orientation of the production cycle. The marginalist doctrine identifies four groups of elements used in the production of goods:

1. Entrepreneurial activity.
2. Capital.
3. Work.
4. Earth.

Factor income

As mentioned above, each resource has its own price. Factor income in the economy is the income that the owner receives from the use of production assets. In practice, several types of remuneration are defined:

1. Rent (mountain, land, water, etc.) as income from natural resources used.
2. Wages as reward for work.
3. Interest as factor income from the use of money capital.
4. Entrepreneurial income as a reward for the use of relevant abilities.
5. Profit as a factor income for the use of real capital.
6. Receipts from intellectual property in the process of using knowledge.

Behind each production factor there is a certain subject (or group of them):

1. Labor belongs to the workers.
2. Land - to landowners.
3. Entrepreneurial abilities - for production organizers.
4. Capital goes to the owners.

All groups of these entities claim factor income from the total share of revenues.

Classification

In theory, income from resources is divided into individual economic and national economic. Factor incomes are:

1. Population.
2. Enterprises.
3. States.
4. Society.

The totality of these incomes determines the highest demand for productive resources, services, and goods.

Specifics

Based on the results of their activities, resource owners receive nominal income - cash. Regarding them, complex relations are created between the state and the owner. The government, through the current tax system, collects a certain portion of the funds. The amount that remains after all obligations are paid off is net factor income. The value of this balance is determined not only by the amount of money, but also by the dynamics and state of prices for services and goods. In this regard, there is such a thing as the purchasing power of funds.

The financial analysis

When conducting it, indicators are used that determine marginal, average and gross factor income. The latter is the proceeds from the sale of all products in money. Average factor income is calculated per unit of products sold. The marginal revenue is the increment in gross revenue from the sale of additional products. It is considered as the ratio of revenues to the increase in the quantity of goods sold. Determining this indicator is of particular importance for the company. In economic practice, the law of diminishing returns applies. The calculation of marginal revenue serves as the basis for an enterprise to change production volumes downwards or upwards.

The essence of the law of diminishing returns

In the process of activity, any entrepreneur:

1. As accurately as possible, determines a socially significant order, qualitative and quantitative characteristics.
2. Organizes the management of the company so that the set goals are achieved.

These tasks are considered the main ones in the activities of an entrepreneur. A businessman always tries to predict the market and reduce risk and uncertainty as much as possible. An entrepreneur must sense the limit beyond which the profitability of his enterprise will decline. In progress management activities a businessman is faced with the phenomenon of falling profitability. Its essence is that the additional costs of one resource, with the quantity of others remaining constant, yield less and less volume of additional goods and, consequently, gross revenue. With a one-time and identical increase in the available production factors, a different result may be obtained.

This situation can lead to an increase in the company's output and gross revenue. However, there is a risk in this case too. With an increase in product supply, it may decrease market price and the income from the sale of each additional unit of production will decrease. This indicates the need to reduce production scale.

Pricing

The enterprise acts as a manufacturer and seller of products, as well as a buyer of factors. As a seller, his typical interest is to sell the product as expensively as possible. Acting as a buyer in the market of production factors, he strives to acquire the necessary resources as cheaply as possible. All these operations are subordinated to revenue. It is considered the main incentive and indicator of the company's performance. The size of production costs and their structure determine certain requirements for the resource acquisition scheme. The only criterion in this process is the priority of the lowest manufacturing costs at high quality manufactured goods. By comparing the market prices of production factors with the marginal products that are created with their help, the entrepreneur forms his choice.

Demand curve

The general principles in accordance with which its formation is carried out boil down to the following provisions:

1. The starting point is the demand for manufactured products.
2. Achieving equality of marginal profits and costs determined by company policy.
3. The structure of demand for resources is created when a unit of capital spent on the acquisition of any means of production produces a maximum marginal product.

Labor supply

It has its own characteristics that are associated with:

1. The size of the population and the size of its working population.
2. The qualitative composition of society, the degree of professional and general training.
3. Duration working week and day.
4. Compliance of the qualification structure of the working population with the needs of the national economic complex for workers in certain specialties.

The overall wage rate is determined at the point of intersection of the supply and demand curves. An increase in the need for labor increases the level of its payment. This, in turn, leads to increased employment. A decrease in demand for labor resources leads to the opposite phenomena. In the process of movement of the value of capital, the availability of available funds, their supply and the need for them are of particular importance.

Conclusion

As mentioned above, all resource owners receive income from them. It is expressed in different forms and is of paramount importance for the movement of the enterprise in the market and expansion of production. What acts as profit for the owner of the resource is costs, costs for the consumer (buyer) of this factor.

For analysis economic activity any company are used the following indicators: total (gross) income TR; average income AR; marginal revenue MR and profit.

Total (gross) income is the total income that a firm receives from selling all its products at market prices. It is defined as the product of the market price of the product and the quantity products sold:

In the Russian economy, total income represents revenue, i.e. the cost of all products sold, and gross income is the difference between revenue and material costs (expenses) for the production and sale of products:

where MZ is material costs (cost of raw materials, materials, fuel, etc.).

Consequently, the concept of “gross income” includes part of the cost of production - labor costs and profit.

A company operating on the market perfect competition, has no ability to influence the price. The price for her is a given value. Therefore, total income depends only on the firm's output.

Another phenomenon in the market imperfect competition. Here the firm can influence the price. To implement more products, she is forced to reduce the price. Thus, a firm's gross income depends on price and production volume.

Average AR revenue is the revenue generated from the sale of a unit of product. It is defined as the ratio of total income TR to the number of products sold

The average income in size is actually equal to the market price.

Marginal revenue MR is the increase in revenue from sales growth per one additional unit of output. It is defined as the ratio of the increase in total income TR to the increase in the quantity of output Q.

This is getting additional income from the sale of an additional unit of production. It shows the degree efficient work companies.

Taking into account the participation of production factors in the formation of income, factor and disposable income are distinguished.

Factor incomes are primary incomes. They are formed from the sale of factors of production (capital, labor, land) and in the process of their use. Factor incomes appear in the following forms: wages are remuneration for the labor of workers; as rent is the provision of premises, equipment, land for rent; as interest is a reward for capital; how profit is an assessment of the work of an entrepreneur; dividends, etc.

Factor incomes are divided into two groups:

• * income based on labor, i.e. labor origin. These are the incomes of workers and employees (wages), entrepreneurs (profit);
• * income of unearned origin. These include interest on capital; interest on stocks, bonds, current accounts; rent for provided property and land for rent, etc.

Disposable income is final (net) income or factor income after paying direct taxes, social security contributions (pensions, benefits, scholarships, etc.). They are used by an individual or family at their own discretion.

Income is subject to distribution among various categories of workers. The well-being of people largely depends on the level of income received. Therefore, correct, fair distribution of income is very important. They must be distributed according to the use of factors of production. Thus, from the use of labor, the company’s employees receive income in the form of wages, from the capital the capital owners have a percentage; from land owners of land land rent, etc.

At the same time, these incomes represent the prices of production factors, i.e., these incomes are used to purchase capital, land, labor, etc. As a result, it turns out that the distribution of monetary income is also carried out through the prices of production factors.

The concepts of “factors of production” and “factor income” are interconnected, and this article will display this relationship.

Factors of production can be represented by the following, using which:

The organization of production of goods is carried out;

The volumes of finished products are regulated.

In turn, they can be classified according to the following characteristics: natural, labor, capital, current, information and financial.

Based on the listed types of resources, it is necessary to briefly describe each of them. For example, labor can be represented as a combination of mental and physical abilities used by people in the process of creating goods. Its main characteristics are:

Intensity, determined by the amount of labor consumed over a given period of time;

Productivity measured by the number of products produced per unit of time.

This includes land, which is divided into:

Areas where they are located industrial premises;

Arable lands on which various crops and crops of grains, melons, etc. are grown;

Mineral deposits.

Another important natural resource is It can only be possessed by a certain part of people performing a huge range of different functions, without which successful effective production activities are simply impossible.

The meaning of the concept of “capital” was gradually adjusted with the constant development of the economic worldview. For example, Ricciardo and Smith considered it a means of production. Other experts in the field of economics argued that it combines money and securities. Today, capital means everything that can bring income to its owner. Based on the last definition, it is divided into real, monetary and financial. However, this factor still requires some clarification. Thus, the financial component of capital in the form of shares, bonds and bank deposits cannot be classified as factors of production, since it is not directly related to production process.

Factor income includes those obtained from the use of factors of production. When comparing them, the following indicators are formed.

From the use of labor we receive factor income - wages. Rent is the income that the owner regularly receives from the use of property and land. The interest is determined by the fee from the use of borrowed funds (loan interest) or funds invested for a certain period by the investor (deposit interest).

The concept of “net factor income” is used for funds received from abroad. In other words, this is the difference between the income that compatriots received abroad and the income foreign citizens who received them on the territory of our country.

Factor incomes can be used in calculating many macroeconomic indicators of the state. Below are some examples.

The following factor incomes are distinguished:

Wages and other compensation for time worked to citizens;

Own income of organizations, enterprises and institutions;

Rental income;

Profit remaining after payment of wages and interest on the loan;

Net interest represented by the difference between corporations paid to others and those received from other firms.

Income is divided into:

From work (salary)

From entrepreneurial activity(profit)

From property (rent)

From valuable papers(percent)

Wage.

The majority of consumers' income comes from wages. Therefore, it has a decisive influence on the quantity of demand consumer goods and their price level. There are two main concepts for determining the nature of wages:

a) wages are the price of labor. Its size and dynamics are formed under the influence of market factors, primarily supply and demand;

b) wages are monetary value the value of the commodity “labor power”, or “the transformed form of the value of the commodity labor power”. Its value is determined by production conditions and market factors - supply and demand, under the influence of which wages deviate from the cost of labor.

There are nominal and real wages.

Nominal- this is the amount of money that an employee receives for a certain period of time: per day, week, month. By its size one can judge its level, but not the level of human consumption and his well-being.

Real wage- this is a mass of vital goods and services that can be purchased for the money that an employee receives in the form of wages. This is the purchasing power of a nominal salary.

There are 2 main forms of wages - time-based and piece-rate.

Entrepreneurial income and economic profit.

The part of the profit remaining with the entrepreneur after paying interest on a bank loan.

Part of the profit remains with the functioning entrepreneur after paying taxes. Entrepreneurial income can be used for personal consumption and for the development of production.

Entrepreneurial income- this is the income that comes from the implementation of entrepreneurial abilities. It consists of normal and economic profit.

Normal profit- this is the minimum income or payment that is necessary to keep an entrepreneur in a particular branch of production.

Economic profit is the remainder of total income after subtracting all costs.

Under the conditions of a competitive market model in a static economy (all cost indicators, data on the supply of resources and data on demand and income are constant), economic profit is always equal to 0. Under these conditions, the future can be predicted quite clearly. If at some stage economic profit arises, then through the well-known mechanism of capital transfer it is eliminated.

Percent.

Credit price - loan interest is the price that is paid for the use of money. It is often considered not in absolute terms (as the amount of money), but in relative terms - as a percentage of the amount of money borrowed. For convenience, the loan interest rate is usually given on an annual basis.

Since the provision of a loan and the return of money are separated in time, the problem of money losing its purchasing power due to inflation arises. Then part of the fee for using the money will go to cover the loss of its purchasing power, and part will actually be a reward to the owner. Distinguish between nominal and real interest rates .

Nominal rate (r N)- is the interest rate expressed in monetary units at the current exchange rate.

Real rate (r R) is the interest rate expressed in constant money or adjusted for inflation. IN general view relationship between nominal and real rates:

r R = (100 + r N) / IP - 100

The loan interest rate is formed depending on the relationship between the demand for money and its supply. There is no one-size-fits-all interest rate. Because the provision of a loan can be differentiated depending on the conditions of return, government regulation of this process, the characteristics of the borrower, and the like. Factors influencing the interest rate.

Providing a loan– this is a risk on the part of the lender, since the borrower, under certain conditions, may not return the money received.

1 - factor degree of risk– the likelihood of the creditor losing money. Here the relationship is direct: the greater the probability of non-return of money, the higher the percentage will be. At the same time, the threat of losing money can reach such a level that it is not compensated for by an increase in interest at all. Under these conditions, no loan is provided.

2 - factor loan size. All other things being equal, the lender gives preference to large loans, since this reduces its costs for studying the economic condition of the borrower, servicing the loan, and the like. That's why the lender agrees to provide larger amounts at lower interest rates.

3 - loan term. Since in the long term the probability of unforeseen events is high, the interest on loans will also be high to reinsure losses from them.

4 - state tax policy. If the interest affecting the interest rate and received from the provision of a loan is not subject to taxes or is subject to taxes on preferential terms, the cost of obtaining a loan will be lower

Economic rent is any income attributed to production costs, which exceeds its opportunity cost.

Rent is the price paid for the use of land and other natural resources, the quantity of which is strictly limited. The latter distinguishes rent from all other types of income.

Let us assume that all land is of the same quality; all land is used to produce only one product; land is rented in a competitive market. Under these conditions, the land supply curve will be completely inelastic (a vertical straight line). The only effective factor in determining rent is the demand for land; it will depend on the price of products grown on the land, the productivity of the land and the prices of resources that are used in conjunction with the land. So, if prices for products grown on land increase, this will increase rent.

Changing the rent does not in any way affect the amount of land offered for use.

Until now we have assumed that the earth has equal fertility. However, in reality the quality of various land plots may differ quite significantly. So the same labor or capital in combination with lands of different fertility does not bring the same results. For more fertile land, the average cost curve will be lower than for less fertile land. Therefore, users of fertile land, other things being equal, will receive additional economic income (differential rent), which is associated with sustainable differences in soil quality. Since the amount of land is limited and someone is already using fertile land, differential rent cannot be eliminated due to the overflow of capital, and therefore the owners of the best land can receive greater rent even in the long run.

But the fertility of the land changes as a result of human economic activity. Usage modern technologies growing agricultural products, additional investments in land can significantly top scores compared to the exploitation of lands used traditionally. This creates differences in the economic fertility of the land, which can also generate differential rent. They are less stable and may be liquidated if competitors switch to a similar land use option.

Economic rent can be received not only by owners of land used for agricultural needs, but also by owners of other natural resources, which are characterized by absolute limitations. These could be mineral deposits, areas attractive for tourism, natural forces (waterfalls, rivers, etc.).

Factor income is the profit that results from the exploitation of various resources or factors of production. These factors include labor, the income received from it is called wages, land rent, interest on capital, and entrepreneurial skills that result in entrepreneurial profit. Profits from personal labor activity and farming also serve as factor income. They directly depend on the factors that are used in production to make a profit.

Basic moments

Any economic resource has its owner. They either consume them, or, what happens more often, sell them in markets, receiving income for it. Buyers of these resources (mostly firms or enterprises) pay for them from the income that they also receive for the resources. It follows that income is income from sales of products and other economic resources.

Types of factor income

There is a separate classification of this economic concept. Factor income is income coming from received resources or from factors of production. Their owners receive the following income:

Firms in economic life do not always have the opportunity to separate the listed types of factor income, because they are often combined with income from product sales.

Factor production and factor income are the basis of the activities of any organization and personal economy. To release and then sell products, you need full complex means and conditions. In other words, a number of factors of production are needed. Besides listed types, they also include information. IN last years it is one of the main factors and is gaining more and more popularity, since only that company is competitive, which has the opportunity to own fresh, truthful, relevant and complete information about the market.

In general, production factors include those objects that determine the possibilities of economic activity, as well as its effectiveness. In other words, this is something that production and sales of products cannot do without.

Basic theories

The main approaches to studying factor production and factor income:

• Marxist theory. This is a doctrine that identifies the following factors of production: labor or labor, objects of labor (parts, raw materials, materials), personal (experience, skills and knowledge) and material (tools) means of labor activity.
• Marginalist theory, which identifies factors such as labor, capital, land, and entrepreneurial ability.

Factors of production

Marginalist (or Western, neoclassical) theory identifies four groups of production factors. These include:

IN modern world highlight the fifth factor - information. This means its timely receipt and further use. Scientific and technological progress, culture, politics and social environment play an important role.

Factor income

Factor markets and factor incomes are closely interrelated with each other.

In market conditions, each factor of production is freely sold and bought in order to bring factor income to its owners. These include:

• Rent is the income generated by the land factor. Regular payments for the use of the owner's property. The owner himself does not need to make any effort to generate income. For example, rent for a plot or housing. A person who lives off rent is called a rentier.
• Interest is income from the capital factor. In other words, the return on the use of capital funds.
• Wages are income from the labor factor. It is payment to a hired worker for work.
• Profit is the income from the factor of entrepreneurial ability. If you subtract all expenses from total income, you get profit. Obtaining it is the goal of any organization and commercial company.

Functional distribution of factor income

Great interest in economic theory causes the problem of distribution and formation of factor income. If for the owners some factors of production are income, then for the buyer they are costs. If for the owners of the workforce wages are income, then for the organization they are production costs.

IN in a broad sense Net factor income is the money that is received as a result of economic activity per unit of time. Income is the result of the work of a company or enterprise, individual or society, expressed in monetary terms.

Types of income

Factor incomes are classified according to various criteria. Based on the recipient, the following income options are distinguished:

• population;
• enterprises;
• states;
• the whole society (national income).

The totality of these incomes determines the highest demand of society. Based on the amount of income received and actually available, they distinguish:

Factor income that enterprises receive from sales of manufactured products is distributed based on a certain dependence of production factors. Wages are formed thanks to invested labor, rent - cost land plot, which is used, interest or profit - the amount of capital used, and entrepreneurial income with the help of entrepreneurial abilities. These forms of factor income in market economy act as prices of production factors.

Entrepreneurial income

This factor is considered as the final result of the distribution of the organization’s profit, as well as as a reward for the manifestation of entrepreneurial abilities.

Business income is understood as that part of the profit that remains at disposal after paying interest on the capital borrowed. Since the credit system began to develop, profits have been divided into business income and interest.

Entrepreneurial income implies:

• good profit, that is, decent remuneration for the entrepreneur, which is necessary to attract and maintain activities in the right direction;
• income that is received on top of normal profit, in other words, it is economic profit.

Profit

Profit is the main motive, as well as the main indicator of the effectiveness of each organization. In other words, profit as factor income is the goal of all production, towards which all resources are directed. Its source is the creative activity of the entrepreneur.

The formation of factor income occurs due to many factors, which include Natural resources, human labor, information Technology And individual characteristics entrepreneur.