Question

Q. Which of the following is/are included in the calculation of factor cost of a commodity?

Select the correct answer using the code given below:

• A. 1 only
• B. 1 and 2 only
• C. 2 and 3 only
• D. 1, 2 and 3

Answer 1

The correct option is B 1 and 2 only

Factor cost:

It is the total cost of all the factors of production consumed or used in producing a good or service. Taxes are not included in calculation of factor cost. Taxes and subsidies are included in calculation of market price of the commodity.

Hence, statements 1 and 2 are correct and statement 3 is incorrect.