The factor market, also known as the input market, is the market for the factors of production -- land, capital and labor. The factors of production can be rented, leased or purchased and can include unfinished goods, finished goods, services and employee salaries. The following are common elements of the factor market.
The factor market is associated with oversimplified and dated economic models that view the economy in terms of producers that buy unfinished inputs and consumers that buy finished goods. This is overly focused on the manufacturing sector. For example, the knowledge economy may use few factors of production beyond labour. The service economy tends to purchase finished goods. It is also increasingly common for consumers to participate in production and for firms to purchase consumer goods.
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Natural Resources (e.g. water)
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