If NNP at market price is ₹1,400 crore and net indirect taxes are ₹110 crore, what is NNP at factor cost?
Answer and explanation
Correct answer: ₹1,290 crore
When moving from market price to factor cost, subtract net indirect taxes. Therefore, NNP at FC = NNP at MP − NIT = ₹1,400 crore − ₹110 crore = ₹1,290 crore. Option D incorrectly adds the taxes, option C ignores them, and option A subtracts an amount that is not given. Hence option B is correct.
Frequently asked questions
What is the correct answer to this question?
₹1,290 crore
Why is this the correct answer?
When moving from market price to factor cost, subtract net indirect taxes. Therefore, NNP at FC = NNP at MP − NIT = ₹1,400 crore − ₹110 crore = ₹1,290 crore. Option D incorrectly adds the taxes, option C ignores them, and option A subtracts an amount that is not given. Hence option B is correct.
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 - NNP.
