If net indirect taxes are 25% of market price and factor cost is ₹18,000 crore, what will be the market price?
Answer and explanation
Correct answer: ₹24,000 crore
The governing relation is FC = MP − NIT. Let market price be x. Since net indirect taxes equal 25% of market price, NIT = 0.25x. Therefore, FC = x − 0.25x = 0.75x. Substituting FC = ₹18,000 crore gives 0.75x = 18,000, so x = 18,000 ÷ 0.75 = ₹24,000 crore. Hence option C is correct; the other values do not satisfy the equation.
Frequently asked questions
What is the correct answer to this question?
₹24,000 crore
Why is this the correct answer?
The governing relation is FC = MP − NIT. Let market price be x. Since net indirect taxes equal 25% of market price, NIT = 0.25x. Therefore, FC = x − 0.25x = 0.75x. Substituting FC = ₹18,000 crore gives 0.75x = 18,000, so x = 18,000 ÷ 0.75 = ₹24,000 crore. Hence option C is correct; the other values do not satisfy the equation.
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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