If GDP at market price is ₹31,000 crore, depreciation is ₹2,500 crore and net indirect taxes are ₹1,750 crore, what will be NDP at factor cost?
Answer and explanation
Correct answer: ₹26,750 crore
Use the two required adjustments: NDP at factor cost = GDP at market price − depreciation − net indirect taxes. First, subtract depreciation to remove the gross component: ₹31,000 − ₹2,500 = ₹28,500 crore. Then subtract net indirect taxes to change market price to factor cost: ₹28,500 − ₹1,750 = ₹26,750 crore. Therefore option B is correct; option C stops after only one adjustment.
Frequently asked questions
What is the correct answer to this question?
₹26,750 crore
Why is this the correct answer?
Use the two required adjustments: NDP at factor cost = GDP at market price − depreciation − net indirect taxes. First, subtract depreciation to remove the gross component: ₹31,000 − ₹2,500 = ₹28,500 crore. Then subtract net indirect taxes to change market price to factor cost: ₹28,500 − ₹1,750 = ₹26,750 crore. Therefore option B is correct; option C stops after only one adjustment.
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.
