NNP at factor cost is ₹2,000 crore. Indirect taxes are ₹250 crore and subsidies are ₹50 crore. What is NNP at market price?
Answer and explanation
Correct answer: ₹2,200 crore
To convert NNP from factor cost to market price, add net indirect taxes. Net indirect taxes = indirect taxes − subsidies = ₹250 crore − ₹50 crore = ₹200 crore. Hence, NNP at market price = ₹2,000 crore + ₹200 crore = ₹2,200 crore. Therefore, option C is correct. Option D wrongly adds the full indirect tax without deducting the subsidy, and option B uses only the tax adjustment partially.
Frequently asked questions
What is the correct answer to this question?
₹2,200 crore
Why is this the correct answer?
To convert NNP from factor cost to market price, add net indirect taxes. Net indirect taxes = indirect taxes − subsidies = ₹250 crore − ₹50 crore = ₹200 crore. Hence, NNP at market price = ₹2,000 crore + ₹200 crore = ₹2,200 crore. Therefore, option C is correct. Option D wrongly adds the full indirect tax without deducting the subsidy, and option B uses only the tax adjustment partially.
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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