If NNP at market prices is ₹870 crore and NIT is −₹40 crore, what will be NNP at factor cost?
Answer and explanation
Correct answer: ₹910 crore
Use the formula NNP at factor cost = NNP at market prices − NIT. Substituting the values gives ₹870 − (−₹40) = ₹870 + ₹40 = ₹910 crore. A negative NIT means subsidies exceed indirect taxes, so factor-cost NNP is higher than market-price NNP by ₹40 crore.
Frequently asked questions
What is the correct answer to this question?
₹910 crore
Why is this the correct answer?
Use the formula NNP at factor cost = NNP at market prices − NIT. Substituting the values gives ₹870 − (−₹40) = ₹870 + ₹40 = ₹910 crore. A negative NIT means subsidies exceed indirect taxes, so factor-cost NNP is higher than market-price NNP by ₹40 crore.
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.
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