If GDP₍MP₎ = 14,000, depreciation = 1,100, indirect taxes = 900, and subsidies = 300, what is NDP₍FC₎?
Answer and explanation
Correct answer: 12,300
First calculate NDP at market price by deducting depreciation: 14,000 − 1,100 = 12,900. Next calculate net indirect taxes: 900 − 300 = 600. Since factor cost is obtained from market price by subtracting net indirect taxes, NDP₍FC₎ = 12,900 − 600 = 12,300. Hence option A is correct.
Frequently asked questions
What is the correct answer to this question?
12,300
Why is this the correct answer?
First calculate NDP at market price by deducting depreciation: 14,000 − 1,100 = 12,900. Next calculate net indirect taxes: 900 − 300 = 600. Since factor cost is obtained from market price by subtracting net indirect taxes, NDP₍FC₎ = 12,900 − 600 = 12,300. Hence option A 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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