Table of Contents
What is GDP at market price and GDP at factor cost?
GDP at Factor Cost = Sum of all GVA at factor cost. GDP at Market Price = GDP at factor cost + Product taxes + Production tax – Product subsidies – Production subsidies.
What is GDP at market price?
Gross domestic product
Gross domestic product at market prices is the sum of the gross values added of all resident producers at market prices, plus taxes less subsidies on imports.
What is the difference between GDP at market price and NDP at factor at factor cost?
Market price includes indirect taxes which go in government’s hands and are not a part of factor income and excludes subsidies which go to the factors of production. So, national product at factor cost includes all the elements of national product at market price except net indirect taxes (Indirect taxes – Subsidies).
Why is GDP at market price?
Gross domestic product at market prices aims to measure the wealth created by all private and public agents in a national territory during a given period. The most key aggregate of national accounts, it represents the end result of the production activity of resident producing units.
What is the difference between the concepts of market price and factor cost?
Factor cost is the raw cost of production, or the costs directly related to the production of goods and services. Market price, on the other hand, is made partially of the factor cost, but other costs such as taxes are added in to determine the final price that must be charged from a consumer.
Why GDP is determined at market price?
Simply put, GDP is the total value of goods and services produced within the country during a year. You take all final finished goods and services produced domestically in volume terms and multiply this by their market prices to arrive at the value of output.
What is the difference between GDP at MP and NDP at MP?
(1) GDP at MP(gross domestic product at market price ) is the sum of the gross value added of the gross values added of all resident producers at market price, plus taxes less subsidies on product (2)NDP at FC(Net domestic product at factor cost) is the income earned by the factors in the form of wages , profit, rent .
What is the relationship between NDP at market price and NDP at factor cost?
Net domestic product at market price = Net- national product at market price – Net factor income from abroad. Net Domestic Product at factor cost (NDP at FC) is the income earned by the factors in the form of wages, profits, rent, interest etc. within the domestic territory of a country.