_____ accounts for the difference between the concept of market price and factor cost in national income measurement.
Net indirect taxes
In national income accounting, the difference between market price and factor cost arises due to the presence of net indirect taxes. The formula used is:
Market Price = Factor Cost + Indirect Taxes - Subsidies
- Indirect taxes (e.g., GST, excise duty, VAT) increase the price of goods and services.
- Subsidies (e.g., government grants, fuel subsidies) reduce the market price of goods and services.
- Net Indirect Taxes = Indirect Taxes - Subsidies.
Thus, net indirect taxes account for the difference between market price and factor cost.
Important Questions from Economy
When goods are produced by exploiting natural resources, it is an activity associated with:
A system in which local farmers were allowed to cultivate temporarily within a plantation is known as:
Which goods from India dominated the international textile markets before the age of mechanized industries?
Which type of farming is practiced in areas of high population pressure on land?
The major economic attribute for comparing countries is their:
