Factor cost is ₹3,450 crore and it is 115 percent of market price. What is market price?
Answer and explanation
Correct answer: ₹3,000 crore
Use the reverse-percentage rule: when factor cost is 115% of market price, 3,450 = 1.15 × market price. Thus market price = 3,450 ÷ 1.15 = 3,450 × 100/115 = ₹3,000 crore. Because factor cost exceeds market price, net indirect taxes are negative, which is economically consistent with subsidies exceeding indirect taxes. Option D takes 115% of the given amount and reverses the relationship.
Frequently asked questions
What is the correct answer to this question?
₹3,000 crore
Why is this the correct answer?
Use the reverse-percentage rule: when factor cost is 115% of market price, 3,450 = 1.15 × market price. Thus market price = 3,450 ÷ 1.15 = 3,450 × 100/115 = ₹3,000 crore. Because factor cost exceeds market price, net indirect taxes are negative, which is economically consistent with subsidies exceeding indirect taxes. Option D takes 115% of the given amount and reverses the relationship.
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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