If market price is ₹4,800 crore and net indirect taxes are ₹550 crore what will be factor cost?
Answer and explanation
Correct answer: ₹4,250 crore
To convert market price into factor cost, net indirect taxes must be deducted: Factor Cost = Market Price − Net Indirect Taxes. Therefore, ₹4,800 crore − ₹550 crore = ₹4,250 crore. Option B is correct. ₹4,800 crore merely repeats the market price, ₹5,350 crore incorrectly adds the tax, and ₹4,050 crore uses an incorrect subtraction.
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What is the correct answer to this question?
₹4,250 crore
Why is this the correct answer?
To convert market price into factor cost, net indirect taxes must be deducted: Factor Cost = Market Price − Net Indirect Taxes. Therefore, ₹4,800 crore − ₹550 crore = ₹4,250 crore. Option B is correct. ₹4,800 crore merely repeats the market price, ₹5,350 crore incorrectly adds the tax, and ₹4,050 crore uses an incorrect subtraction.
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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