Principles of Microeconomics / Unit 13 MIC 1201 short lesson, about 20 seconds
Income Comes from Factor Markets
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The idea
Income comes from owning resources and selling their services: labor for wages, land for rent, capital for interest. Factor prices are set in factor markets, and for most people the factor is labor.
In practice
A wage is the price of an hour of work, set by demand and supply.
Where people slip
Buyers here are firms and sellers households; unit two's roles are reversed.
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