If GNP at factor cost is ₹18,300 crore and net indirect taxes are ₹1,050 crore, what will be GNP at market price?
Answer and explanation
Correct answer: ₹19,350 crore
The governing conversion rule is GNP at market price = GNP at factor cost + net indirect taxes, because market price includes the tax effect net of subsidies. Therefore, GNP at market price = ₹18,300 crore + ₹1,050 crore = ₹19,350 crore. Hence, option C is correct. Option A incorrectly subtracts the taxes, while option B ignores them and option D adds an excessive amount.
Frequently asked questions
What is the correct answer to this question?
₹19,350 crore
Why is this the correct answer?
The governing conversion rule is GNP at market price = GNP at factor cost + net indirect taxes, because market price includes the tax effect net of subsidies. Therefore, GNP at market price = ₹18,300 crore + ₹1,050 crore = ₹19,350 crore. Hence, option C is correct. Option A incorrectly subtracts the taxes, while option B ignores them and option D adds an excessive amount.
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.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
