If factor cost is ₹2,500 crore and net indirect taxes are ₹300 crore, what will be the market price?
Answer and explanation
Correct answer: ₹2,800 crore
The governing formula is Market Price = Factor Cost + Net Indirect Taxes. Substituting the given values gives ₹2,500 crore + ₹300 crore = ₹2,800 crore. Hence, option C is correct. Option B is only the factor cost, option A subtracts the tax instead of adding it, and option D adds an excessive amount. Positive net indirect taxes raise market price above factor cost.
Frequently asked questions
What is the correct answer to this question?
₹2,800 crore
Why is this the correct answer?
The governing formula is Market Price = Factor Cost + Net Indirect Taxes. Substituting the given values gives ₹2,500 crore + ₹300 crore = ₹2,800 crore. Hence, option C is correct. Option B is only the factor cost, option A subtracts the tax instead of adding it, and option D adds an excessive amount. Positive net indirect taxes raise market price above factor cost.
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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