Which of the followings is NOT an example of factor payment?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Pension.
Factor payments are rewards paid to factors of production for their contribution to the economy:
- Interest → Paid to capital (for loans/investments).
- Wages → Paid to labor (for work).
- Rent → Paid to land (for use of property).
Pension is not a factor payment because:
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It is a transfer payment (part of government welfare or retirement benefits), not compensation for current production.
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Unlike wages/interest/rent, it does not arise from direct participation in economic activity.