4.1.3—Market to basic prices

Market prices include taxes on products and exclude subsidies, while basic prices measure the amount received by producers before product taxes and after product subsidies. To move from market to basic prices, subtract taxes on products and add subsidies.

State which valuation is used before adjusting; otherwise the sign can be reversed.

If GDP at market prices is 900, product taxes are 80 and subsidies are 20, GDP at basic prices is 840.

Basic prices are not “lower prices” in every case; the adjustment depends on the relative size of taxes and subsidies.