While estimating national income by the income method, which of the following incomes is classified as mixed income of a self-employed person?
Answer and explanation
Correct answer: Income of a tailor running his own shop
A tailor operating an own-account shop is self-employed in an unincorporated business. The earnings usually combine a return for personal labour, a return on the owner’s capital, and entrepreneurial profit. Because these elements cannot be separately measured with sufficient accuracy, the total is recorded as mixed income. A dividend is property income, house rent is rental income, and government salary is compensation of employees.
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What is the correct answer to this question?
Income of a tailor running his own shop
Why is this the correct answer?
A tailor operating an own-account shop is self-employed in an unincorporated business. The earnings usually combine a return for personal labour, a return on the owner’s capital, and entrepreneurial profit. Because these elements cannot be separately measured with sufficient accuracy, the total is recorded as mixed income. A dividend is property income, house rent is rental income, and government salary is compensation of employees.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Income Method.
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