If net indirect taxes rise from negative ₹80 crore to ₹55 crore, by how much does the gap between market price and factor cost change?
Answer and explanation
Correct answer: ₹135 crore increase
The governing concept is MP − FC = net indirect taxes, so the gap between market price and factor cost is exactly the net indirect tax amount. Its change is final minus initial: ₹55 crore − (-₹80 crore) = ₹135 crore. Therefore, the gap increases by ₹135 crore and option D is correct. ₹55 crore is only the final gap, not the increase.
Frequently asked questions
What is the correct answer to this question?
₹135 crore increase
Why is this the correct answer?
The governing concept is MP − FC = net indirect taxes, so the gap between market price and factor cost is exactly the net indirect tax amount. Its change is final minus initial: ₹55 crore − (-₹80 crore) = ₹135 crore. Therefore, the gap increases by ₹135 crore and option D is correct. ₹55 crore is only the final gap, not the increase.
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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