ABSTRACT
This chapter analyzes the markets for the remaining factors of production: capital, land, and entrepreneurship. In the cases of capital and land, the important consideration is that the ownership rights to as well as the services of capital and land can be traded in the marketplace. In the case of entrepreneurship, the residual nature of the returns to entrepreneurship, as opposed to the "guaranteed" nature of the returns to the other factors, is significant. The demand and supply model can be used to analyze both markets. Capital's share only emerges from the first market. There, demand and supply determine the rental price and quantity of capital employed. The product of those two terms will give the capital's slice of the pie. An increase in the demand for capital can occur for two reasons. One, conditions in the product market may have changed, allowing firms to sell more goods and services. Two, the productivity of capital may have changed.
