If GNP at market price is ₹4,600 crore and GNP at factor cost is ₹4,310 crore while indirect taxes are ₹380 crore, what are subsidies?
Answer and explanation
Correct answer: ₹90 crore
The governing relation is MP − FC = net indirect taxes = indirect taxes − subsidies. First, net indirect taxes = ₹4,600 − ₹4,310 = ₹290 crore. Therefore subsidies = indirect taxes − net indirect taxes = ₹380 − ₹290 = ₹90 crore. Option B is correct. ₹290 crore is the net indirect tax, not the subsidy; the other options do not satisfy the relation.
Frequently asked questions
What is the correct answer to this question?
₹90 crore
Why is this the correct answer?
The governing relation is MP − FC = net indirect taxes = indirect taxes − subsidies. First, net indirect taxes = ₹4,600 − ₹4,310 = ₹290 crore. Therefore subsidies = indirect taxes − net indirect taxes = ₹380 − ₹290 = ₹90 crore. Option B is correct. ₹290 crore is the net indirect tax, not the subsidy; the other options do not satisfy the relation.
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.
