Q.Explain in brief - NNP at factor cost.

NNP at factor cost = NNP at market price − indirect taxes + subsidies; it is the income actually earned by the factors of production and is the same as National Income.

NNP at factor cost (National Income) is the total income earned by the factors of production (land, labour, capital, organisation) of a country in a year.

• Market prices include indirect taxes (which raise price above cost) and exclude subsidies (which lower price below cost). To get the amount that actually reaches the factors, we adjust the market-price value:

  NNP at factor cost = NNP at market price − Indirect taxes + Subsidies

• It can also be reached from GNP: NNP at factor cost = GNP at market price − Depreciation − Indirect taxes + Subsidies. …