The income approach values goods and services at factor cost.To get market values we must add
A)subsidies and subtract indirect taxes.
B)wages.
C)net operating surplus.
D)indirect taxes and subtract subsidies.
E)interest,rent and profit.

Question

Quizplus · Accepted Answer

To get market values from factor costs, we need to adjust for indirect taxes and subsidies. Indirect taxes increase the final price of goods and services, while subsidies decrease it. Therefore, to accurately reflect market values, we need to add subsidies and subtract indirect taxes from the factor cost estimate. Options A, B, C, and E are incorrect because they do not account for these adjustments.

The Income Approach Values Goods and Services at Factor Cost