If market price is ₹5,000 crore and net indirect taxes are ₹350 crore, what will be the factor cost?
Answer and explanation
Correct answer: ₹4,650 crore
Use the conversion formula Factor Cost = Market Price − Net Indirect Taxes. Substituting the values gives ₹5,000 crore − ₹350 crore = ₹4,650 crore. Therefore option B is correct. Option D results from adding the tax, which reverses the required conversion, while option C ignores the tax and option A subtracts an incorrect amount.
Frequently asked questions
What is the correct answer to this question?
₹4,650 crore
Why is this the correct answer?
Use the conversion formula Factor Cost = Market Price − Net Indirect Taxes. Substituting the values gives ₹5,000 crore − ₹350 crore = ₹4,650 crore. Therefore option B is correct. Option D results from adding the tax, which reverses the required conversion, while option C ignores the tax and option A subtracts an incorrect amount.
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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