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Wages:

 The price paid to labour for its contribution to the process of production is called wages. Labour is an important factor of production. If there is no labour to work, all other factors, be it land or capital, will remain idle. Types of Wages: 1. Piece Wages: Piece wages are the wages paid according to the work done by the worker. To calculate the piece wages, the number of units produced by the worker is taken into consideration. 2. Time Wages: If the labourer is paid for his services according to time, it is called as time wages. For example, if the labour is paid Rs. 35 per day, it will be termed as time wage. 3. Cash Wages: Cash wages refer to the wages paid to the labour in terms of money. The salary paid to a worker is an instance of cash wages. 4. Wages in Kind: When the labourer is paid in terms of goods rather than cash, is called the wage in kind.  These types of wages are popular in rural areas. 5. Contract Wages: Under this type, the wages are fixed in the beginning fo
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Rent:

In simple words, ‘ rent’ is used as a part of the product which is paid to the owner of land for the use of his goods and services. Types of Rent: The main types of rent are as under: 1. Economic Rent: Economic rent refers to the payment made for the use of land alone. But in economics, the term rent is used in the sense of economic rent. In the words of Ricardo and other classical economists,  economic rent refers to the payment for the use of land alone It is also called Economic Surplus because it emerges without any effort on the part of the landlord. Prof. Boulding termed it “Economic Surplus”. 2. Gross Rent: Gross rent is the rent that is paid for the services of land and the capital invested in it. Gross rent consists of: (1) Economic rent. It refers to the payment made for the use of land. (2) Interest on capital invested for improvement of land. (3) Reward for the risk taken by the landlord in investing his capital. 3. Scarcity Rent: Scarcity rent refers to the price paid fo
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Factor Market

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 A factor market is a marketplace for the services of a factor of production. A factor market facilitates the purchase and sale of services of factors of production, which are inputs like labor, capital, land, and raw materials that are used by a firm to make a finished product. A factor market is distinct from the goods and services market, which is the market for finished products or services. For example, in the appliances market, the market for refrigerators and dishwashers would be the goods market. The market for workers who are skilled in refrigerator and dishwasher assembly would be an example of a factor market. Another example of a factor market would be the market for raw materials like steel and plastic, which are two of the materials used for refrigerators and dishwashers. Factor Pricing: Factors of production can be defined as inputs used for producing goods or services with the aim to make an economic profit. In economics, there are four main factors of production, namel
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Law of Returns to Scale

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 In the long run, all factors of production are variable. No factor is fixed. Accordingly, the scale of production can be changed by changing the quantity of all factors of production. Definition: “The term returns to scale refers to the changes in output as all factors change by the same proportion.” Koutsoyiannis Explanation: In the long run, the output can be increased by increasing all factors in the same proportion. Generally, laws of returns to scale refer to an increase in output due to an increase in all factors in the same proportion. Such an increase is called returns to scale. The above-stated table explains the following three stages of returns to scale: 1. Increasing Returns to Scale: Increasing returns to scale or diminishing cost refers to a situation when all factors of production are increased, output increases at a higher rate. It means if all inputs are doubled, the output will also increase at a faster rate than double. Hence, it is said to be increasing returns to
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Law of Proportionality

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  Law of Variable Proportions occupies an important place in economic theory. This law is also known as the Law of Proportionality. “An increase in some inputs relative to other fixed inputs will in a given state of technology cause output to increase, but after a point the extra output resulting from the same additions of extra inputs will become less and less.” Samuelson Assumptions: (i) Constant Technology: The state of technology is assumed to be given and constant. If there is an improvement in technology the production function will move upward. (ii) Factor Proportions are Variable: The law assumes that factor proportions are variable. If factors of production are to be combined in a fixed proportion, the law has no validity. (iii) Homogeneous Factor Units: The units of variable factor are homogeneous. Each unit is identical in quality and amount with every other unit. (iv) Short-Run: The law operates in the short-run when it is not possible to vary all factor inputs. Explanat
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