A product market refers to a place where goods and services are bought and sold. A factor market refers to the employment of factors of production, such as labour, capital and land.

In conclusion, the factor market is where buying and selling of factors take place. These factor markets differ from the product market, even though both work through price mechanisms. Unlike the product market, the demand for factors of production is a derived demand.

The factor market requires a keen eye to secure reliable and cost-effective sources, while product markets require a deep understanding of consumer tastes, competitive landscapes and effective product positioning.

Explore the definitions, characteristics, and examples of factor market and product market. Learn about their interdependence and the impact on supply and demand.

Factor Market vs Product Market. The product market is where goods and services are sold and bought, while the factor market is where different factors of production like land, capital, and labor are bought and sold.

The main difference between Factor Market and Product Market is that in the Factor Market, you buy and sell resources like labor and capital, while in the Product Market, you buy and sell goods and services.

Table of contents. Factor Market Definition. Factor markets are important in the economy because they allocate scarce productive resources to companies which enables them to use these resources in the most efficient way. These scarce productive resources are referred to as the factors of production. So, what is a factor of production?

Key Takeaways. In the view of economists, there are only two markets: the factor market (or input market) and the goods and services, or output, market. The three main factor markets are...

Factor Market vs. Product Market. In the realm of economics, two fundamental markets play distinct yet interconnected roles: factor markets and product markets. These markets are essential components of an economy, but they serve different purposes and involve different transactions.

In a factor market, businesses produce goods or services in exchange for factors of production, such as labor, land, or capital. In a product market, businesses sell their goods or services to consumers. Each type of market has its own advantages and disadvantages.