If GDP at factor cost is ₹6,000 crore and market price is 7% higher than factor cost, what are net indirect taxes?
Answer and explanation
Correct answer: ₹420 crore
The governing concept is that GDP at market price equals GDP at factor cost plus net indirect taxes. Since the market-price value is 7% higher than factor cost, the net indirect tax amount is 7% of ₹6,000 crore: (7/100) × 6,000 = ₹420 crore. Therefore, option B is correct. ₹6,420 crore is the resulting GDP at market price, not the net indirect taxes; the other numerical choices use incorrect percentages.
Frequently asked questions
What is the correct answer to this question?
₹420 crore
Why is this the correct answer?
The governing concept is that GDP at market price equals GDP at factor cost plus net indirect taxes. Since the market-price value is 7% higher than factor cost, the net indirect tax amount is 7% of ₹6,000 crore: (7/100) × 6,000 = ₹420 crore. Therefore, option B is correct. ₹6,420 crore is the resulting GDP at market price, not the net indirect taxes; the other numerical choices use incorrect percentages.
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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