If NNP at market price is ₹980 crore and NIT is ₹130 crore, what will be NNP at factor cost?
Answer and explanation
Correct answer: ₹850 crore
To change NNP at market price into NNP at factor cost, subtract net indirect taxes because market-price income includes those taxes. Apply the formula: NNPFC = NNMP − NIT = 980 − 130 = ₹850 crore. Option B ignores the tax adjustment, option C adds the tax instead of subtracting it, and option D gives only the tax amount. Thus option A is correct.
Frequently asked questions
What is the correct answer to this question?
₹850 crore
Why is this the correct answer?
To change NNP at market price into NNP at factor cost, subtract net indirect taxes because market-price income includes those taxes. Apply the formula: NNPFC = NNMP − NIT = 980 − 130 = ₹850 crore. Option B ignores the tax adjustment, option C adds the tax instead of subtracting it, and option D gives only the tax amount. Thus option A 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.
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