If net indirect taxes are 30 percent of market price and factor cost is ₹21,000 crore what will be market price?
Answer and explanation
Correct answer: ₹30,000 crore
Net indirect taxes are 30% of market price, so factor cost represents the remaining 70% of market price. Let market price be M. Then 0.70M = ₹21,000 crore. Dividing by 0.70 gives M = ₹30,000 crore. Hence option C is correct. A common mistake is to add 30% to factor cost, although the question defines the tax percentage with market price as its base.
Frequently asked questions
What is the correct answer to this question?
₹30,000 crore
Why is this the correct answer?
Net indirect taxes are 30% of market price, so factor cost represents the remaining 70% of market price. Let market price be M. Then 0.70M = ₹21,000 crore. Dividing by 0.70 gives M = ₹30,000 crore. Hence option C is correct. A common mistake is to add 30% to factor cost, although the question defines the tax percentage with market price as its base.
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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