Market price will be equal to Factor Cost when:
Market price will be equal to Factor Cost when:
(a) Indirect Taxes are Zero
(b) Indirect Taxes are equal to subsidies
(c) No indirect tax and no subsidies
(d) Both (b) and (c)
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Ans – (d)
Market Price = Factor Cost + (indirect tax – subsidies)
When there is no indirect tax and no subsidies
Market Price = Factor Cost
When indirect tax is equal to subsidies
Lets indirect tax and subsidies are ₹ 20
Market Price = Factor Cost + (₹ 20 – ₹ 20)
Market Price = Factor Cost
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