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Factor Price

   Also found in: Wikipedia 0.01 sec.
Factor Price
The price at which the means of production (that is, land, labor, capital and sometimes entrepreneurship) are sold. Economists disagree about what determines factor prices. Marxists and classical economists argue that factor prices represent the intrinsic value of the means of production. Other economists, however, believe that factor prices come from demand for the means of production.


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Of course, there may be other, more standard effects on factor prices if there are labor mobility frictions or if task trade leads to changes in relative prices.
of Chicago) notes applications to price theory, international economics and public finance as he covers the two-sector model of production and distribution using only geometric tools, establishing the basic relationship between commodity and factor prices and between production allocation and the distribution of income.
However, factor price equalisation will occur over time, partly as a result of VFDI flows, and so VFDI may eventually be replaced by HFDI.
 
 
 
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