GNP at factor cost is ₹3,200 crore. Indirect taxes are ₹280 crore and subsidies are ₹60 crore. What is GNP at market price?
Answer and explanation
Correct answer: ₹3,420 crore
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.
Frequently asked questions
What is the correct answer to this question?
₹3,420 crore
Why is this the correct answer?
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.
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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