If NNP at factor cost is ₹1,850 crore, while indirect taxes are ₹260 crore and subsidies are ₹90 crore, what is NNP at market price?
Answer and explanation
Correct answer: ₹2,020 crore
To move from factor cost to market price, add net indirect taxes. Net indirect taxes = indirect taxes − subsidies = 260 − 90 = ₹170 crore. Thus, NNP at market price = 1,850 + 170 = ₹2,020 crore. Option C is correct. Subtracting the net tax would move in the opposite direction, and adding the gross tax without deducting subsidies would give an incorrect result.
Frequently asked questions
What is the correct answer to this question?
₹2,020 crore
Why is this the correct answer?
To move from factor cost to market price, add net indirect taxes. Net indirect taxes = indirect taxes − subsidies = 260 − 90 = ₹170 crore. Thus, NNP at market price = 1,850 + 170 = ₹2,020 crore. Option C is correct. Subtracting the net tax would move in the opposite direction, and adding the gross tax without deducting subsidies would give an incorrect result.
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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