The worker offers the factor of production labor in exchange for money. He sells it to any entrepreneur that demands his labor. Money paid for labor is also referred to as wages. The entrepreneur will offer any price that will grant him a sufficient entrepreneurial profit for his project. If another entrepreneur wants to utilize the same worker’s labor he will have to offer him a price that is higher than the one paid to him by his current employer. This creates a tendency of the price for a worker’s labor to adjust based on the price that consumers are willing to pay for the goods that his labor contributes to.

Related Content

  • N/A