Explanation:

NNP at Market Price and National Income at Factor Cost! The phrase at factor cost is to be contrasted with the phrase at market prices. Goods produced are sold at market prices which include the indirect taxes imposed by the Government. Indirect taxes are levied on commodities, such as excise duty on beer and cloth etc.The market value of the national product exceeds the income paid to the factors of production by the amount of indirect taxes. Hence, net national income at factor cost shows the income actually received by the factors of production.