The price given by the final purchasers of the consumer as well as capital goods is known as the market price. If we determine the values of different concepts of national income at prevalent prices of goods and services, then the concepts are said to be measured at market price. Here we try to explain the meaning of different concepts of national income (GDP, NDP, GNP, and NNP) measured at market price (concepts of national income at market price).
Gross Domestic Product at Market Price (GDP at MP)
GDP is the money value or market value of all newly produced final goods and services (consumer goods and services, capital goods, and goods and services produced by the government) inside the national territory of a country during a year.
If the gross domestic product of any nation is measured at the actual market price which is either paid by the consumers or the producers when they purchase different goods and services for the purpose of consumption and investment respectively then it can be referred to as GDP measured at market price. Essentially, the measurement of the value of all final products produced within a country at the current market price generates GDP at the market price. There may be three ways to measure the value of the gross domestic product at market price.
GDP at MP = P1. Q1 + P2. Q2+……+Pn.Qn
Where GDP at MP means the gross domestic product at market Price, P means the price of the commodity, and Q stands for the quantity of the commodity.
GDP at MP = Total Product of (Primary sector + Secondary Sector +Tertiary sector)
Where the Primary sector Agriculture Sector; the Secondary sector Manufacturing Sector, and the Tertiary sector is Service Sector
GDP at MP = C+I+G+(X-M)
Where ‘C’ is the private final consumption expenditure made by the household sector, ‘I’ is the gross domestic capital formation or gross capital formation/gross investment expenditure made by the business sector, and ‘G’ is all the expenditure made by the government except for transfer payments and ‘X-M’ is different between export and import which is called net export.
Net Domestic Product at Market Price (NDP at MP)
NDP can be defined as the net monetary measure of all newly manufactured final products made within a country during a year. Hence, NDP is part of GDP after subtracting the value of depreciation.
If the value of NDP is measured at the current market price, then it is NDP at the market price. Essentially, the measurement of the value of all final products produced within a country at the current market price after allowing for deprecation generates NDP at the market price. Symbolically it is expressed as below.
NDP at MP = GDP at MP- D
Where D is Depreciation or Capital Consumption Allowances or Consumption of Fixed Capital
Gross National Product at Market Price (GNP at MP)
GNP may be defined as the total market value of all final goods and services produced annually in a country plus net factor income from abroad (NFIA). Net factor income from abroad is defined as the difference between income earned by the citizens of any economy working abroad and the income earned by the foreign citizens working in the economy.
If the value of the gross national product is measured at a prevailing market price that is either paid by consumers or producers while buying final consumer as well as capital goods is known as GNP measured at market price.
GNP at MP consists of the monetary value of all economic activities performed by domestic factors of production inside and outside the country. The monetary value of economic production produced by foreign factors within a country is not measured by GNP at market price. Symbolically it can be expressed as
GNP at MP = GDP at MP + NFIA
GNP at MP= NDP at MP + D + NFIA
Where NFIA = Receipt from domestic factors working outside the country – Payment to foreign factors working inside the country
Net National Product at Market Price (NNP at MP)
NNP can be defined as the market value of all final goods and services including net factor income from abroad after allowing for depreciation. So, NNP is the GNP after deducing depreciation.
If the value of NNP is measured at the current market price, then it is known as NNP measured at market price. It is also known as national income measured at market price. Symbolically,
NNP at MP = GNP at MP – D
Summary of Concepts of National Income at Market Price
Different concepts of national income like GDP, NDP, GNP, and NNP are if measured at a current market price of final goods and services (consumer goods and services, capital goods, and government-produced goods and services) then it is recognized as the account of concepts of national income at market price. The following chart shows a summary of the measurement of different concepts of national income at market price.