If factor cost is ₹1,050 crore and market price is ₹1,020 crore, what are net indirect taxes?
Answer and explanation
Correct answer: Negative ₹30 crore
Net indirect taxes are calculated as Market Price − Factor Cost. Hence, net indirect taxes = 1,020 − 1,050 = −₹30 crore. The negative sign is economically meaningful: subsidies exceed indirect taxes by ₹30 crore. Option A gives only the absolute difference and loses the sign; options C and D use an incorrect magnitude.
Frequently asked questions
What is the correct answer to this question?
Negative ₹30 crore
Why is this the correct answer?
Net indirect taxes are calculated as Market Price − Factor Cost. Hence, net indirect taxes = 1,020 − 1,050 = −₹30 crore. The negative sign is economically meaningful: subsidies exceed indirect taxes by ₹30 crore. Option A gives only the absolute difference and loses the sign; options C and D use an incorrect magnitude.
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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