Market Price and Factor Cost

The same output can be valued in two different ways, depending on whose point of view is taken:

• Market Price (MP) is the price actually paid by the buyer in the market. It already includes any indirect taxes (GST, excise, customs duty) charged by the government and already excludes any subsidy granted by the government, because a subsidy lowers the price the buyer actually pays.
• Factor Cost (FC) is the amount actually received by the producer for the factors of production employed — it is what is left after the government's tax/subsidy adjustment is removed.

where

$\text{Net Indirect Taxes (NIT)} = \text{Indirect Taxes} - \text{Subsidies}$ …