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What is net value added at factor cost? Is it always equal to factor incomes? Why?

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 Net value added at factor cost is the sum total of factor payments. In other words, it is the cost incurred by the firm on various factors of production. It is the result of the contribution of factors of production and hence is distributed among them as factor payments such as rent, wages, interest and profits. Thus, it is equal to the sum of factor payments. In short:

Net value added at FC = Rent + wages + Interest + profits. 

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