Which of the following constitute the reason for difference between market prices and factor cost?
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Explanation:
Market price is basically the current price at which an asset is bought or sold in the market. It includes the cost of production in the form of wages,rent,interest,profit. etc. ... Hence, the reason for difference between market price and factor cost is indirect taxes and subsidies.
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Answer:
The reason for difference between market prices and factor price are INDIRECT TAXES and SUBSIDIES.
Explanation:
Market price is basically the current price at which an asset is bought or sold in the market. It include the cost of production in the form of wages, rent, interest, profit, etc. whereas Factor price may not reflect the effect of taxes and subsidies unlike market price. It takes into account only if the actual cost of production including profit.
Hence, the reason fot difference between the market price and factor price are indirect taxes and subsidies.
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