If (MP − FC) = −₹150 crore in an economy, then which combination can be correct?
Answer and explanation
Correct answer: Indirect taxes ₹110 crore and subsidies ₹260 crore
The governing relation is MP − FC = net indirect taxes = indirect taxes − subsidies. The required value is −₹150 crore. In option B, ₹110 − ₹260 = −₹150 crore, so the combination exactly satisfies the condition. Options A and D produce +₹150 crore, while option C produces +₹150 crore because subsidies are zero. A negative difference means subsidies exceed indirect taxes.
Frequently asked questions
What is the correct answer to this question?
Indirect taxes ₹110 crore and subsidies ₹260 crore
Why is this the correct answer?
The governing relation is MP − FC = net indirect taxes = indirect taxes − subsidies. The required value is −₹150 crore. In option B, ₹110 − ₹260 = −₹150 crore, so the combination exactly satisfies the condition. Options A and D produce +₹150 crore, while option C produces +₹150 crore because subsidies are zero. A negative difference means subsidies exceed indirect taxes.
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.
