Question

Define national product at factor prices.

Answer 1

• National Product at Factor Prices is the total value of all final goods and services produced by the normal residents of a country in a year, measured by adding all factor incomes like wages, rent, interest, and profits.
• It excludes indirect taxes and includes subsidies, showing the actual earnings of the producers or factors of production.

It is calculated as:

National Product at Factor Prices = National Product at Market Prices − Indirect Taxes + Subsidies