The presence of _________creates a difference in the value between the market price and the factor cost of a product.

Question

Quizplus · Accepted Answer

Indirect taxes (such as sales taxes) increase the market price of a product while subsidies lower the factor cost of production. Therefore, the presence of subsidies and indirect taxes can affect the difference between the market price and factor cost, leading to a difference in the value of the product. Corporate profits and consumption are not directly related to this concept. Direct taxes, while they can affect factor costs, do not necessarily create a difference between market price and factor cost.

The Presence of _________Creates a Difference in the Value Between