If market price is ₹1,200 and net indirect taxes are ₹200, what will be the factor cost?
Answer and explanation
Correct answer: ₹1,000
The governing formula is Factor Cost = Market Price − Net Indirect Taxes. Substituting the values gives ₹1,200 − ₹200 = ₹1,000. Therefore, option B is correct. Option C merely repeats the market price, option D adds the tax instead of deducting it, and option A subtracts an incorrect amount. The unit remains rupees because no other unit is specified.
Frequently asked questions
What is the correct answer to this question?
₹1,000
Why is this the correct answer?
The governing formula is Factor Cost = Market Price − Net Indirect Taxes. Substituting the values gives ₹1,200 − ₹200 = ₹1,000. Therefore, option B is correct. Option C merely repeats the market price, option D adds the tax instead of deducting it, and option A subtracts an incorrect amount. The unit remains rupees because no other unit is specified.
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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