What happens to the gross or net nature while converting market price into factor cost?
Answer and explanation
Correct answer: The gross or net nature remains unchanged
Converting market price into factor cost only changes the valuation basis. Net indirect taxes are deducted from market price, or equivalently subsidies are added and indirect taxes are deducted. No depreciation adjustment is made, so gross remains gross and net remains net. Domestic or national status also remains unchanged. Therefore option C is correct.
Frequently asked questions
What is the correct answer to this question?
The gross or net nature remains unchanged
Why is this the correct answer?
Converting market price into factor cost only changes the valuation basis. Net indirect taxes are deducted from market price, or equivalently subsidies are added and indirect taxes are deducted. No depreciation adjustment is made, so gross remains gross and net remains net. Domestic or national status also remains unchanged. 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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