Production Factor Supply
Factor services are demanded by the entrepreneur who supplies these services. These services are supplied by their owners.
The supply of factors refers to the quantities of factors available at alternative prices. The problem related to the supply side of factors is somewhat complicated because the shape of the supply curve is likely to differ from one factor to another.
In short factor services are supplied by their owners. Land owners transfer the rights to firms for the use of their firms for the use of their land and change rent. Workers and employers supply labour and receive wages and salaries. Capital owners supply capital and they are paid interest. Now it becomes clear that the owners of factor supply these factors because they are rewarded for that. How much the factor would like to get price of his services depends upon its opportunity cost. Thus, a person working for X-company only if this company offers to pay 5000 is the opportunity cost of this person. Thus, if an entrepreneur is ready to pay him more than for the services he can attract more persons to work for him.
In other words, at higher price supply of a factor goes up and vice-versa as can be seen here.
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