Suppliers of factors of production are rewarded or compensated, which varies depending on what factors they supply. If we add up, we know the compensation as factor income. If it is calculated for all economic actors in an economy, it is national income.
Economists say the rewards for factors of production are:
Rent
Rent is a reward for land. Landlords can lease their land to producers throughout the economy.
In the perspective of economics, land does not only include agricultural, plantation or industrial areas. But, it also includes the natural resources contained in it, such as various metal minerals, petroleum, and coal. They can be renewable resources, which are abundantly available in nature and non-renewable resources, which can be exhausted if we over-exploit them.
Wages
Compensation to workers takes many forms. It can be wages, salaries, and benefits such as insurance and pensions. Wages usually refer to compensation to manual workers, for which they are paid hourly. Meanwhile, salary refers to compensation in a fixed amount, usually paid monthly. If the wages received by workers depend on their total hours worked, it is not on salary. But, in economics, we specifically refer to them all as wages, ie compensation for …