Factor market (economics)

The term factor market is understood in economics a market, bought and sold on the factors of production. Typical factor markets are the labor and the capital market.

Factor markets play in economics a significant role in the microeconomic explanation of production processes, particularly in the modeling by the same production functions. In addition, they are used in macroeconomic modeling in the context of growth theory, as for example in the context of the Solow model.

• Economics