Output at market price is ₹4,800 crore and factor cost is 5 percent higher than market price. What is factor cost?
Answer and explanation
Correct answer: ₹5,040 crore
The question states that factor cost is 5% higher than market-price output, so the base is ₹4,800 crore. Five percent of ₹4,800 crore is 0.05 × 4,800 = ₹240 crore. Adding this increase gives factor cost = ₹4,800 + ₹240 = ₹5,040 crore. Option B merely repeats the base, while A decreases it and D applies an excessive increase. Therefore, option C is correct.
Frequently asked questions
What is the correct answer to this question?
₹5,040 crore
Why is this the correct answer?
The question states that factor cost is 5% higher than market-price output, so the base is ₹4,800 crore. Five percent of ₹4,800 crore is 0.05 × 4,800 = ₹240 crore. Adding this increase gives factor cost = ₹4,800 + ₹240 = ₹5,040 crore. Option B merely repeats the base, while A decreases it and D applies an excessive increase. Therefore, option C 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 - Market price and factor cost.
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