Convert Factor Cost to Market Price — Economics Calculator

Formula

Market Price = Factor Cost + Net Indirect Taxes

Worked example

An aggregate of 920 at factor cost plus NIT of 80 equals 1,000 at market price.

The interactive calculator on this page accepts your own question values and displays the final answer with step-by-step working.

Class 12 Economics · Factor Cost ↔ Market Price

Factor cost to market price formula

Market Price = Factor Cost + Net Indirect Taxes

And:

Net Indirect Taxes (NIT) = Indirect Taxes − Subsidies

So if a question gives indirect taxes and subsidies separately, calculate NIT first and then add it to factor cost.

Solved example 1 — NIT already given

Factor cost = ₹920 crore and NIT = ₹80 crore.

Market Price = 920 + 80 = ₹1,000 crore.

Solved example 2 — taxes and subsidies given separately

Factor cost = ₹1,200 crore, indirect taxes = ₹150 crore and subsidies = ₹30 crore.

1. NIT = 150 − 30 = ₹120 crore.
2. Market Price = 1,200 + 120 = ₹1,320 crore.

Solved example 3 — when subsidies exceed indirect taxes

Factor cost = ₹800 crore, indirect taxes = ₹20 crore and subsidies = ₹50 crore.

1. NIT = 20 − 50 = −₹30 crore.
2. Market Price = 800 + (−30) = ₹770 crore.

A negative NIT simply means subsidies exceed indirect taxes in the figures given.

Reverse formula

If market price is given and factor cost is required:

Factor Cost = Market Price − Net Indirect Taxes

Sign rule to remember

• Factor Cost → Market Price: add NIT.
• Market Price → Factor Cost: subtract NIT.
• NIT: indirect taxes minus subsidies.

Quick self-check

1. FC = 500, NIT = 40. MP = ? Answer: 540.
2. FC = 700, taxes = 80, subsidies = 20. MP = ? Answer: 760.
3. MP = 900, NIT = 50. FC = ? Answer: 850.

Need to calculate NIT first? Open the Net Indirect Tax calculator →

Need the reverse conversion? Open Market Price to Factor Cost →

Frequently asked questions

What formula does the Factor Cost to Market Price Calculator use?

This calculator uses: Market Price = Factor Cost + Net Indirect Taxes. The interactive page shows the working step by step.

Is the Factor Cost to Market Price Calculator free?

Yes. It is free to use and does not require a login.

Can I use the calculator for exam preparation?

Yes. Use it to check numerical working and then practise writing the formula, substitution and final answer yourself.

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