Where Income Comes From
Households receive income mainly in exchange for providing businesses with labor and other factors of production—the essential things needed to produce goods and services. Economists define the factors of production as land, labor, and capital. Land is self-explanatory and includes not only farmland but all land devoted to factories, offices, terminals, and other commercial purposes. Labor refers to all human effort aimed at producing something or performing a service for payment.
The factors of production are land, labor, and capital. Capital refers to productive plant and equipment—any tangible thing that ...