If output at factor cost is ₹940 crore and net indirect taxes are negative ₹25 crore, what is the market price?
Answer and explanation
Correct answer: ₹915 crore
The relationship is market price = factor cost + net indirect taxes. Here, factor-cost output is ₹940 crore and net indirect taxes are −₹25 crore. Therefore, market price = ₹940 + (−₹25) = ₹915 crore. Option A is correct. A positive ₹25 adjustment would produce ₹965 crore, but the question clearly states that net indirect taxes are negative.
Frequently asked questions
What is the correct answer to this question?
₹915 crore
Why is this the correct answer?
The relationship is market price = factor cost + net indirect taxes. Here, factor-cost output is ₹940 crore and net indirect taxes are −₹25 crore. Therefore, market price = ₹940 + (−₹25) = ₹915 crore. Option A is correct. A positive ₹25 adjustment would produce ₹965 crore, but the question clearly states that net indirect taxes are negative.
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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