Editing Income (section)

===Factor income===
In [[economics]], "[[factor income]]" is the return accruing for a person, or a nation, derived from the "factors of production": rental income, wages generated by labor, the interest created by capital, and profits from entrepreneurial ventures.<ref>{{cite web|title=factor income|url=http://www.businessdictionary.com/definition/factor-income.html|work=BusinessDictionary.com|publisher=WebFinance, Inc|access-date=20 June 2012|author=Staff|year=2012|archive-date=18 June 2012|archive-url=https://web.archive.org/web/20120618040855/http://www.businessdictionary.com/definition/factor-income.html|url-status=dead}} m</ref>

In [[consumer theory]] 'income' is another name for the "budget constraint", an amount <math>Y</math> to be spent on different goods x and y in quantities <math>x</math> and <math>y</math> at prices <math>P_x</math> and <math>P_y</math>.  The basic equation for this is
:<math>Y=P_x \cdot x + P_y \cdot y</math>
This equation implies two things. First buying one more unit of good x implies buying <math>\frac{P_x}{P_y}</math> less units of good y.  So, <math>\frac{P_x}{P_y}</math> is the ''relative'' price of a unit of x as to the number of units given up in y. Second, if the price of x falls for a fixed <math>Y</math> and fixed <math>P_y,</math> then its relative price falls. The usual hypothesis, the [[law of demand]], is that the quantity demanded of x would increase at the lower price. The analysis can be generalized to more than two goods.

The theoretical generalization to more than one period is a multi-period [[wealth (economics)|wealth]] and income constraint. For example, the same person can gain more productive skills or acquire more productive income-earning assets to earn a higher income. In the multi-period case, something might also happen to the economy beyond the control of the individual to reduce (or increase) the flow of income. Changing measured income and its relation to consumption over time might be modeled accordingly, such as in the [[permanent income hypothesis]].