Correct Answer: Factor Cost
Subject: economics
Explanation: • <b>Key Fact</b> National Income is fundamentally calculated as Net National Product (NNP) at Factor Cost. • <b>Supporting Detail</b> Factor cost refers to the cost of factors of production such as labor, capital, and entrepreneurship. • <b>Related Concept</b> It includes wages, rents, interests, and profits distributed in the production process. • <b>Why wrong options are wrong</b> Market cost includes indirect taxes and excludes subsidies. Sunk cost is an unrecoverable past cost. • <b>Exam Trick</b> National Income = True Income of the people making things = Factor Cost. • <b>Additional Info</b> However, for GDP headline growth figures, India now uses GVA at Basic Prices and GDP at Market Prices.
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