Commerce Exam > Commerce Questions > Basis of the difference between the concept o...
Start Learning for Free
Basis of the difference between the concept of Market price an Factor cost is?
Most Upvoted Answer
Basis of the difference between the concept of Market price an Factor ...
The reason for difference between market price and factor cost is indirect taxes and subsidies.
Community Answer
Basis of the difference between the concept of Market price an Factor ...
Basis of the difference between the concept of Market price and Factor cost
Factors of Production
- Market Price: Market price refers to the price at which goods and services are bought and sold in the market. It is determined by the forces of demand and supply in the market.
- Factor Cost: Factor cost, on the other hand, refers to the total cost incurred by the producer in the production process. It includes the cost of raw materials, labor, rent, interest, and profit.
Difference in Calculation
- Market Price: Market price does not take into account any indirect taxes or subsidies. It is the price that consumers pay for a product or service.
- Factor Cost: Factor cost is calculated by subtracting subsidies and adding indirect taxes to the market price. It gives a more accurate representation of the actual cost of production.
Purpose and Significance
- Market Price: Market price is important for consumers as it helps them make purchasing decisions based on the prices of goods and services in the market.
- Factor Cost: Factor cost is important for producers as it helps them determine the actual cost of production and make decisions regarding pricing, cost-cutting, and profitability.
In conclusion, while market price and factor cost are both important concepts in economics, they serve different purposes and are calculated differently. Understanding the difference between the two can help businesses make informed decisions about pricing and production costs.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Basis of the difference between the concept of Market price an Factor cost is?
Question Description
Basis of the difference between the concept of Market price an Factor cost is? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Basis of the difference between the concept of Market price an Factor cost is? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Basis of the difference between the concept of Market price an Factor cost is?.
Basis of the difference between the concept of Market price an Factor cost is? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Basis of the difference between the concept of Market price an Factor cost is? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Basis of the difference between the concept of Market price an Factor cost is?.
Solutions for Basis of the difference between the concept of Market price an Factor cost is? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Basis of the difference between the concept of Market price an Factor cost is? defined & explained in the simplest way possible. Besides giving the explanation of
Basis of the difference between the concept of Market price an Factor cost is?, a detailed solution for Basis of the difference between the concept of Market price an Factor cost is? has been provided alongside types of Basis of the difference between the concept of Market price an Factor cost is? theory, EduRev gives you an
ample number of questions to practice Basis of the difference between the concept of Market price an Factor cost is? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup