Question

Which formula defines Basic Prices?

Options

• \(\text{Basic Prices} = \text{Market Prices} - \text{Net Production Taxes}\)

• \(\text{Basic Prices} = \text{Total Output} - \text{Taxes}\)

• \(\text{Basic Prices} = \text{Factor Cost} + \text{Net Product Taxes}\)

• \(\text{Basic Prices} = \text{Factor Cost} + \text{Net Production Taxes}\)

Answer 1

Basic Prices are obtained by adding Net Production Taxes to Factor Cost. Net Production Taxes include production taxes minus subsidies.