How Do You Calculate Factor Cost?

What is the difference between basic price and factor cost?

The difference between GDP at factor cost and GVA at basic prices is that production taxes are included and production subsidies excluded from the latter.

Production taxes and subsidies are different from product taxes and subsidies.

However, excise duty, value added tax etc are all product taxes..

What is the basic price?

The basic price is the amount receivable by the producer from the purchaser for a unit of a good or service produced as output minus any tax payable, and plus any subsidy receivable, by the producer as a consequence of its production or sale.

What is NNP at market price?

Net national product (NNP) refers to gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.

What is the formula of factor cost?

Formula: GDP (gross domestic product) at market price = value of output in an economy in the particular year – intermediate consumption at factor cost = GDP at market price – depreciation + NFIA (net factor income from abroad) – net indirect taxes.

Which one is measured at factor cost?

Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. This allows the effect of any subsidy or indirect tax to be removed from the final measure.

How is Gdpfc calculated?

GDPFC= NDPFC +Depreciation = 1200 +50 = 1250 Crores. GNPFC = GNPMP- NIT = 1400 – 120 = 1280 Crores. factor income to abroad = 30 Crores.