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Aggregates related to national income - Market price and factor cost
राष्ट्रीय आय से संबंधित समुच्चय: बाजार मूल्य और साधन लागत
In this Class 12 Economics topic from National Income and Related Aggregates, students learn how national income measures are expressed at market price and factor cost. The topic explains the role of net indirect taxes, including indirect taxes and subsidies, in converting one valuation to the other. Students also connect these concepts with aggregates such as GDP, NDP, GNP and NNP, helping them interpret national income data and apply the relevant relationships in numerical questions.
TOPIC PRACTICE
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Expert · Level 1View options
₹19,250 crore and ₹19,000 crore
₹19,700 crore and ₹19,450 crore
₹20,300 crore and ₹20,050 crore
₹18,950 crore and ₹19,200 crore
Expert · Level 1View options
Zero
₹70 crore
₹140 crore
₹280 crore
Expert · Level 1View options
₹2,800 crore
₹3,000 crore
₹3,200 crore
₹3,600 crore
Expert · Level 1View options
₹3,670 crore
₹3,850 crore
₹4,030 crore
₹4,280 crore
Expert · Level 1View options
₹4,700 crore
₹4,800 crore
₹4,900 crore
₹5,100 crore
Expert · Level 1View options
₹3,600 crore
₹4,000 crore
₹4,400 crore
₹4,840 crore
Expert · Level 1View options
No change
1 percent fall
1 percent rise
20 percent fall
Question 1ExpertLevel 1
GDP at market price is ₹22,000 crore, depreciation is ₹1,700 crore, indirect taxes are ₹1,500 crore, subsidies are ₹450 crore and net factor income from abroad is minus ₹250 crore. What are NDP at factor cost and national income respectively?
Correct answer: A
Net indirect taxes equal indirect taxes minus subsidies: ₹1,500 − ₹450 = ₹1,050 crore. Therefore NDPFC = GDPMP − depreciation − NIT = 22,000 − 1,700 − 1,050 = ₹19,250 crore. National income equals NDPFC plus NFIA, so it is 19,250 + (−250) = ₹19,000 crore. Thus option A is correct.
If (MP=FC) and indirect taxes are ₹140 crore then what must subsidies be?
Correct answer: C
The governing relation is MP − FC = net indirect taxes, and net indirect taxes equal indirect taxes minus subsidies. Since MP equals FC, the difference is zero. Therefore, 140 − subsidies = 0, so subsidies = ₹140 crore. Option C is correct. Zero would leave a positive difference, while ₹70 crore and ₹280 crore would produce non-zero differences in the wrong direction or size.
If GDP at market price is ₹3,500 crore while depreciation is ₹300 crore and net indirect taxes are ₹200 crore then what is NDP at factor cost?
Correct answer: B
Use the aggregate-conversion sequence. First, subtract depreciation from GDP at market price: NDP at market price = 3,500 − 300 = ₹3,200 crore. Then subtract net indirect taxes to convert market price into factor cost: NDP at factor cost = 3,200 − 200 = ₹3,000 crore. Hence option B is correct. ₹3,200 crore stops before the tax adjustment, while the other values apply an incorrect operation.
If GNP at factor cost is ₹4,100 crore while depreciation is ₹250 crore and net indirect taxes are ₹180 crore then what is NNP at market price?
Correct answer: C
The governing identities are NNP at factor cost = GNP at factor cost − depreciation, and NNP at market price = NNP at factor cost + net indirect taxes. Thus NNP at factor cost = 4,100 − 250 = ₹3,850 crore. Adding ₹180 crore gives NNP at market price = 3,850 + 180 = ₹4,030 crore. Option C is correct; subtracting the tax or ignoring depreciation gives the distractor values.
GDP at market price is ₹5,200 crore. Depreciation is ₹400 crore and net indirect taxes are negative ₹100 crore. What is NDP at factor cost?
Correct answer: C
First convert GDP to NDP by subtracting depreciation: NDP at market price = 5,200 − 400 = ₹4,800 crore. Next use NDP at factor cost = NDP at market price − net indirect taxes. Because net indirect taxes are −₹100 crore, the calculation is 4,800 − (−100) = ₹4,900 crore. Therefore option C is correct. The negative sign increases the factor-cost value rather than reducing it.
If market price is x and net indirect taxes are negative 10% of market price while factor cost is ₹4,400 crore, what is market price?
Correct answer: B
Use FC = MP − NIT. Since NIT is negative 10% of market price, NIT = −0.10x. Thus FC = x − (−0.10x) = 1.10x. Substituting the given factor cost, ₹4,400 = 1.10x, so x = ₹4,400 ÷ 1.10 = ₹4,000 crore. Therefore option B is correct. A negative net indirect tax means subsidies exceed indirect taxes, so factor cost is greater than market price.
If real GDP rises by 10 percent in the first year and falls by 10 percent in the second year then what is the total change after two years?
Correct answer: B
Percentage changes in successive periods apply to different bases. If initial real GDP is 100, a 10 percent rise makes it 110. A 10 percent fall in the second year is calculated on 110, so the result is 110 × 0.90 = 99. Compared with the initial 100, this is a 1 percent fall. Equal percentage rises and falls therefore do not cancel; option B is correct.
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