If factor cost is ₹430, indirect tax is ₹50 and subsidy is ₹12, what is the market price?
Answer and explanation
Correct answer: ₹468
To convert factor cost into market price, add net indirect taxes. First calculate NIT = indirect tax − subsidy = ₹50 − ₹12 = ₹38. Then market price = factor cost + NIT = ₹430 + ₹38 = ₹468. Option D incorrectly adds the subsidy, B ignores taxes, and A subtracts the net adjustment. Hence option C is correct.
Frequently asked questions
What is the correct answer to this question?
₹468
Why is this the correct answer?
To convert factor cost into market price, add net indirect taxes. First calculate NIT = indirect tax − subsidy = ₹50 − ₹12 = ₹38. Then market price = factor cost + NIT = ₹430 + ₹38 = ₹468. Option D incorrectly adds the subsidy, B ignores taxes, and A subtracts the net adjustment. Hence option C is correct.
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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