Which of the following terms best describes income received in the form of wages, interest, rent, profit, and government programs?

• A. Consumer surplus
• B. Marginal utility
• C. Factor payments
• D. Opportunity cost

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of 'income received' in microeconomics. Income can come from various sources such as wages, interest, rent, profit, and government transfers.
2. Step 2: Recognize that wages are payments for labor, interest is payment for capital, rent is payment for land, and profit is payment for entrepreneurship. These are all payments to factors of production.
3. Step 3: Recall that 'Factor payments' is the term used to describe income earned by owners of the factors of production (labor, capital, land, and entrepreneurship).
4. Step 4: Differentiate 'Factor payments' from other terms: 'Consumer surplus' relates to the difference between what consumers are willing to pay and what they actually pay; 'Marginal utility' refers to the additional satisfaction from consuming one more unit of a good; 'Opportunity cost' is the value of the next best alternative foregone.
5. Step 5: Conclude that the best term describing income received in the form of wages, interest, rent, profit, and government programs is 'Factor payments' because it directly relates to payments for factors of production.