If indirect taxes are ₹48 crore and subsidies are ₹72 crore, what is the value of net indirect taxes?
Answer and explanation
Correct answer: −₹24 crore
Use the formula Net Indirect Taxes = Indirect Taxes − Subsidies. Therefore, net indirect taxes = ₹48 crore − ₹72 crore = −₹24 crore. Option B is correct. The negative sign is meaningful: subsidies exceed indirect taxes by ₹24 crore, causing market price to be below factor cost by that amount. ₹120 crore incorrectly adds the two figures.
Frequently asked questions
What is the correct answer to this question?
−₹24 crore
Why is this the correct answer?
Use the formula Net Indirect Taxes = Indirect Taxes − Subsidies. Therefore, net indirect taxes = ₹48 crore − ₹72 crore = −₹24 crore. Option B is correct. The negative sign is meaningful: subsidies exceed indirect taxes by ₹24 crore, causing market price to be below factor cost by that amount. ₹120 crore incorrectly adds the two figures.
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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