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SubjectsEconomics
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
Up to 25 questions from this page. Select your focus, then start.
When converting an aggregate from factor cost to market price, add net indirect taxes. Thus, NDP at Market Price = NDP at Factor Cost + Net Indirect Taxes = ₹980 crore + ₹65 crore = ₹1,045 crore. Therefore, option C is correct. Option A subtracts the tax and represents the reverse direction, while options B and D do not result from the given values.
Net indirect taxes are calculated by subtracting subsidies from indirect taxes: Net Indirect Taxes = Indirect Taxes − Subsidies. Therefore, ₹130 crore − ₹45 crore = ₹85 crore. Option B is correct. ₹130 crore is only the gross indirect-tax amount, while ₹175 crore would result from incorrectly adding taxes and subsidies. ₹75 crore reflects an incorrect subtraction and is not the required net value.
Use the formula Net Indirect Taxes = Indirect Taxes − Subsidies. Therefore, net indirect taxes = ₹48 crore − ₹72 crore = −₹24 crore. Option B is correct. The negative sign is meaningful: subsidies exceed indirect taxes by ₹24 crore, causing market price to be below factor cost by that amount. ₹120 crore incorrectly adds the two figures.
The accounting relationship is Market Price − Factor Cost = Net Indirect Taxes. Net indirect taxes are indirect taxes minus subsidies, and they explain the adjustment between the price paid in the market and the factor payments received by producers. Therefore, a difference of ₹110 crore equals net indirect taxes, making option C correct. Depreciation, foreign factor income, and net exports belong to different national-income adjustments.
The difference is given by Market Price − Factor Cost = Indirect Taxes − Subsidies. If market price is lower, the left side is negative, so net indirect taxes must also be negative. This occurs when subsidies exceed indirect taxes. Hence option B is correct. If taxes exceed subsidies, market price is higher; if both are zero, the two values are equal. Direct taxes do not determine this specific conversion.
The governing relation is Market Price = Factor Cost + Net Indirect Taxes, where Net Indirect Taxes = Indirect Taxes − Subsidies. Thus, net indirect taxes = ₹60 − ₹15 = ₹45. Therefore, market price = ₹400 + ₹45 = ₹445, so option C is correct. ₹400 ignores taxes, ₹355 subtracts the net tax, and ₹475 incorrectly adds the subsidy.
The governing conversion formula is Factor Cost = Market Price − Net Indirect Taxes, because market price includes the net effect of indirect taxes over factor payments. Substituting the values gives ₹720 − ₹55 = ₹665. Hence option B is correct. ₹720 is the given market price, while ₹775 results from adding the tax instead of subtracting it; ₹610 uses an incorrect deduction.
The difference between market price and factor cost equals net indirect taxes: indirect taxes minus subsidies. When a subsidy rises while other factors remain unchanged, net indirect taxes fall. Consequently, the gap between market price and factor cost generally becomes smaller. Thus option B is correct. The subsidy does not always double the gap, and saying it has no effect ignores its direct role in reducing net indirect taxes.
The governing relationship is: Market Price − Factor Cost = Net Indirect Taxes, and Net Indirect Taxes = Indirect Taxes − Subsidies. Therefore, 75 = 120 − Subsidies, so Subsidies = 120 − 75 = ₹45 crore. Option A incorrectly subtracts the wrong quantities, while ₹75 crore is the net indirect tax, not the subsidy. Thus, option B is correct.
Net indirect taxes are calculated as Market Price − Factor Cost. Thus, Net Indirect Taxes = ₹1,320 crore − ₹1,350 crore = −₹30 crore. The negative sign is economically meaningful: subsidies exceed indirect taxes by ₹30 crore. Option A gives the correct magnitude but misses the sign, whereas options C and D use an incorrect difference. Therefore, option B is correct.
The governing identity is Market Price = Factor Cost + Net Indirect Taxes. Rearranging gives Factor Cost = Market Price − Net Indirect Taxes. Substituting the values: Factor Cost = 560 − (−40) = 560 + 40 = ₹600 crore. A negative net tax means subsidies exceed indirect taxes; therefore, option B incorrectly subtracts 40 instead of subtracting a negative number. Option D is correct.
The conversion between market price and factor cost uses net indirect taxes because indirect taxes and subsidies affect the prices of goods and services. A direct tax is levied on personal income, company income or property after income is earned; it does not enter the selling price of the product. It is therefore neither a factor payment nor a subsidy, and it is not limited to foreign countries. Option A is correct.
When subsidies exceed indirect taxes by ₹55 crore, net indirect taxes equal −₹55 crore because Net Indirect Taxes = Indirect Taxes − Subsidies. Since Market Price = Factor Cost + Net Indirect Taxes, the negative amount makes market price ₹55 crore lower than factor cost. Option D reverses the relationship, while options B and C have no basis in the stated difference. Thus, option A is correct.
The governing relationship is GNP at market price = GNP at factor cost + net indirect taxes. Net indirect taxes equal indirect taxes minus subsidies: ₹280 − ₹60 = ₹220 crore. Hence, GNP at market price = ₹3,200 + ₹220 = ₹3,420 crore, so option C is correct. Option D incorrectly adds subsidies, while options A and B do not apply the proper adjustment.
To convert market price into factor cost, subtract net indirect taxes. The formula is factor cost = market price − indirect taxes + subsidies. Thus, factor cost = ₹525 − ₹75 + ₹20 = ₹470. Therefore, option C is correct. ₹450 results from forgetting to add back the subsidy, while ₹430 and ₹580 use incorrect adjustments or signs.
The governing formula is output at factor cost = output at market price − net indirect taxes. Since net indirect taxes are negative ₹35 crore, the calculation is ₹1,100 − (−₹35) = ₹1,135 crore. Subtracting a negative amount increases the result. Therefore, option D is correct; ₹1,065 would incorrectly treat the negative tax as positive.
The relationship is market price = factor cost + net indirect taxes. Here, factor-cost output is ₹940 crore and net indirect taxes are −₹25 crore. Therefore, market price = ₹940 + (−₹25) = ₹915 crore. Option A is correct. A positive ₹25 adjustment would produce ₹965 crore, but the question clearly states that net indirect taxes are negative.
Net indirect taxes are calculated as indirect taxes minus subsidies. The change in them is therefore change in taxes minus change in subsidies: ₹18 crore − ₹6 crore = ₹12 crore. Net indirect taxes consequently increase by ₹12 crore, so option A is correct. Adding both changes would give ₹24 crore, but that ignores the opposite effect of subsidies.
Since net indirect taxes = indirect taxes − subsidies, their change equals −₹15 crore − (−₹9 crore). This gives −₹6 crore, meaning a decrease of ₹6 crore. Option B is correct. The decrease in subsidies partly offsets the tax decrease because a smaller amount is being subtracted. Treating both falls as reductions would incorrectly give ₹24 crore.
The gap between market price and factor cost equals net indirect taxes, which are indirect taxes minus subsidies. If both taxes and subsidies rise equally by ₹25 crore, the change in the gap is +₹25 − +₹25 = zero. Thus, the gap remains unchanged and option C is correct. It would change only if the two components changed by unequal amounts.
GDP at factor cost is obtained by subtracting net indirect taxes from GDP at market price: GDPFC = GDPMP − NIT. When GDP at market price remains constant and NIT decreases, a smaller amount is subtracted. Therefore, GDP at factor cost increases, making option A correct. It does not remain unchanged because the deduction has changed.
The governing relationship is output at market price = output at factor cost + net indirect taxes. Factor-cost output is constant, so an increase in net indirect taxes raises the market-price measure by the same direction. Therefore, output at market price increases and option B is correct. It would remain unchanged only if net indirect taxes did not change.
The gap between market price and factor cost equals net indirect taxes, calculated as indirect taxes minus subsidies. With indirect taxes unchanged, a decrease in subsidies makes the subtraction smaller, so net indirect taxes rise. Consequently, the gap widens and option B is correct. It would remain unchanged only if subsidies also remained unchanged or another change exactly offset this effect.
Net indirect taxes are calculated as indirect taxes minus subsidies. When indirect taxes fall and subsidies remain unchanged, net indirect taxes decrease. Since market price equals factor cost plus net indirect taxes, the difference between market price and factor cost becomes smaller. Option A reverses the effect, while C is not necessarily true and D has no logical basis.
Net indirect taxes (NIT) are the difference between market price and factor cost: NIT = indirect taxes − subsidies. Therefore, to convert the same aggregate from market price to factor cost, subtract NIT: GNPFC = GNPMP − NIT. Option A uses the wrong direction, C reverses the conversion, and D changes GNP into GDP without justification.
QUIZ COMPLETE
