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9. Production: Particular Factor Prices and Productive Incomes

1. Introduction

UP TO THIS POINT WE have analyzed the determination of the rate of interest and of the prices of productive factors on the market. We have also discussed the role of entrepreneurship in the changing world and the consequences of changes in saving and investment. We now return to analysis of the particular ultimate factors—labor and land—and to a more detailed discussion of entrepreneurial incomes. Our analysis of general factor pricing in chapter 7 treated prices as they would be in the ERE, a state toward which they are always tending. Our discussion of entrepreneurship in chapter 8 showed that this tendency is a result of drives toward profits and away from losses by capitalist-entrepreneurs. Now let us return to the particular factors and analyze their pricing, their supplies and incomes, and the effects of a changing economy upon them.