If factor cost Is greater than market price, then it means
a)Indirecttaxes>subsidies
b)indirect taxes = subsidies
c)indirect taxes which is right plz tell me and why?
I'm assuming that the last option reads indirect taxes<subsidies.
If factor cost is greater than market price, it can only be possible when the market price becomes lower due to subsidies provided by the government. Thus, the correct answer should be (c).
Example:
Factor cost of good X= Rs. 100
Indirect taxes= Rs.10
Subsidies= Rs. 20
In this case the market price of good X will be = 100+10-20= Rs. 90, which is less than the market price.
Therefore, the correct answer is (c), when indirect taxes<subsidies.
If factor cost is greater than market price, it can only be possible when the market price becomes lower due to subsidies provided by the government. Thus, the correct answer should be (c).
Example:
Factor cost of good X= Rs. 100
Indirect taxes= Rs.10
Subsidies= Rs. 20
In this case the market price of good X will be = 100+10-20= Rs. 90, which is less than the market price.
Therefore, the correct answer is (c), when indirect taxes<subsidies.