If factor cost is x and net indirect taxes are 15% of factor cost, while market price is ₹2,300 crore, what is the value of x?
Answer and explanation
Correct answer: ₹2,000 crore
The governing formula is MP = FC + NIT. Since NIT is 15% of factor cost x, MP = x + 0.15x = 1.15x. Substituting MP = ₹2,300 crore gives 1.15x = 2,300, so x = 2,300 ÷ 1.15 = ₹2,000 crore. Therefore, option B is correct. Option C reflects an incorrect percentage treatment, while option D adds 15% to market price instead of solving for factor cost.
Frequently asked questions
What is the correct answer to this question?
₹2,000 crore
Why is this the correct answer?
The governing formula is MP = FC + NIT. Since NIT is 15% of factor cost x, MP = x + 0.15x = 1.15x. Substituting MP = ₹2,300 crore gives 1.15x = 2,300, so x = 2,300 ÷ 1.15 = ₹2,000 crore. Therefore, option B is correct. Option C reflects an incorrect percentage treatment, while option D adds 15% to market price instead of solving for 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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