To obtain the factor cost of a good from its market price,

Question

Quizplus · Accepted Answer

The factor cost of a good is the cost of all the inputs that go into producing it, including labor, raw materials, and capital. To obtain the factor cost from the market price, we need to subtract any indirect taxes that are included in the price and add any subsidies that reduce the cost of production. Therefore, the correct option is to subtract indirect taxes and add subsidies, which is option B.

To Obtain the Factor Cost of a Good from Its