Which of the following statements correctly differentiates between GDP at factor cost and GDP at market prices?

Q: Answer-Which of the following statements correctly differentiates between GDP at factor cost and GDP at mar...

Explanation GDP at factor cost represents the income earned by factors of production within domestic territory, while GDP at market prices captures value at consumer level. The bridge is Net Indirect Taxes Indirect Taxes Subsidies . This adjustment converts producers cost-based output into market-valued output, as used in international comparisons.

A GDP at factor cost excludes depreciation, while GDP at market prices includes it. Correct Incorrect

B GDP at market prices = GDP at factor cost + (Indirect Taxes – Subsidies). Correct Incorrect

C GDP at factor cost = GDP at market prices + Net Exports. Correct Incorrect

D GDP at market prices excludes net indirect taxes. Correct Incorrect

E GDP at factor cost includes only government income. Correct Incorrect

Detailed Solution

Explanation: GDP at factor cost represents the income earned by factors of production within domestic territory, while GDP at market prices captures value at consumer level. The bridge is Net Indirect Taxes (Indirect Taxes – Subsidies) . This adjustment converts producers’ cost-based output into market-valued output, as used in international comparisons.

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Which of the following statements correctly differentiates between GDP at factor cost and GDP at market prices?

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