A production unit paid wages of ₹200, rent of ₹40, interest of ₹30 and profit of ₹50. What is the factor cost?
Answer and explanation
Correct answer: ₹320
Factor cost is the total remuneration paid to all factors of production. The relevant payments are wages, rent, interest and profit. Therefore, Factor Cost = ₹200 + ₹40 + ₹30 + ₹50 = ₹320, making option C correct. ₹270 omits interest and profit, while ₹290 omits profit. ₹350 is an incorrect total and has no basis in the given data.
Frequently asked questions
What is the correct answer to this question?
₹320
Why is this the correct answer?
Factor cost is the total remuneration paid to all factors of production. The relevant payments are wages, rent, interest and profit. Therefore, Factor Cost = ₹200 + ₹40 + ₹30 + ₹50 = ₹320, making option C correct. ₹270 omits interest and profit, while ₹290 omits profit. ₹350 is an incorrect total and has no basis in the given data.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - Market price and factor cost.
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