In the context of Indian economy, which of the following is included in the factor cost?
Show answer & explanation
Correct answer: B
Explanation
'Factor cost' is a very important concept in the Indian economy and in the calculation of national income.
Factor cost -
Factor cost is the total cost incurred on the four factors of production used in the production of a good or service. It does not include any taxes paid to the government, nor does it subtract subsidies.
Four major factors of production and their payments:
Land: Rent is paid in exchange for it.
Labor: Wages/salaries are paid in exchange for it.
Capital: Interest is paid in exchange for it.
Enterprise: Profit is earned in exchange for it.