Final answer:
In economics, the difference between a firm's revenues and its costs is referred to as profit. Factor payments are what the firm pays for the use of factors of production.
Step-by-step explanation:
In economics, the difference between a firm's revenues and its costs is referred to as profit. Profit is what's left over after the firm pays all its other costs, and it is what entrepreneurs earn for taking the risk of starting a business.
For every factor of production or input, there is an associated factor payment, which is what the firm pays for the use of those factors. From the firm's perspective, factor payments are costs, and from the owner of each factor's perspective, factor payments are income.A cost function is a mathematical expression or equation that shows the cost of producing different levels of output.