If market price is ₹2,700 crore and net indirect taxes are minus ₹300 crore what will be factor cost?
Answer and explanation
Correct answer: ₹3,000 crore
The governing relationship is Factor Cost = Market Price − Net Indirect Taxes. Since net indirect taxes are negative ₹300 crore, the calculation is ₹2,700 − (−₹300) = ₹2,700 + ₹300 = ₹3,000 crore. Therefore, option C is correct. Option A would apply if taxes were positive ₹300 crore, while options B and D ignore or overstate the adjustment.
Frequently asked questions
What is the correct answer to this question?
₹3,000 crore
Why is this the correct answer?
The governing relationship is Factor Cost = Market Price − Net Indirect Taxes. Since net indirect taxes are negative ₹300 crore, the calculation is ₹2,700 − (−₹300) = ₹2,700 + ₹300 = ₹3,000 crore. Therefore, option C is correct. Option A would apply if taxes were positive ₹300 crore, while options B and D ignore or overstate the adjustment.
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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