If national income is ₹2,100 crore and net indirect taxes are negative ₹50 crore, then what is NNP at market price?
Answer and explanation
Correct answer: ₹2,050 crore
National income is NNP at factor cost. To obtain NNP at market price, add net indirect taxes: NNP at MP = NNP at FC + NIT. Substituting the values gives ₹2,100 + (−₹50) = ₹2,050 crore. A negative NIT reduces market-price valuation because subsidies exceed indirect taxes. Therefore option B is correct; option D wrongly treats the negative tax as a positive addition.
Frequently asked questions
What is the correct answer to this question?
₹2,050 crore
Why is this the correct answer?
National income is NNP at factor cost. To obtain NNP at market price, add net indirect taxes: NNP at MP = NNP at FC + NIT. Substituting the values gives ₹2,100 + (−₹50) = ₹2,050 crore. A negative NIT reduces market-price valuation because subsidies exceed indirect taxes. Therefore option B is correct; option D wrongly treats the negative tax as a positive addition.
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.
