If market price is ₹1,800 and net indirect taxes are minus ₹200, what will be the factor cost?
Answer and explanation
Correct answer: ₹2,000
The governing formula is Factor Cost = Market Price − Net Indirect Taxes. Since net indirect taxes are negative ₹200, factor cost = ₹1,800 − (−₹200) = ₹2,000. Hence, option C is correct. A negative adjustment increases factor cost above market price. Option A would apply to a positive ₹200 tax, option B ignores the adjustment, and option D adds ₹400 instead of ₹200.
Frequently asked questions
What is the correct answer to this question?
₹2,000
Why is this the correct answer?
The governing formula is Factor Cost = Market Price − Net Indirect Taxes. Since net indirect taxes are negative ₹200, factor cost = ₹1,800 − (−₹200) = ₹2,000. Hence, option C is correct. A negative adjustment increases factor cost above market price. Option A would apply to a positive ₹200 tax, option B ignores the adjustment, and option D adds ₹400 instead of ₹200.
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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