Q.Explain the difference between National Income at Market Price and National Income at Factor Cost.

The correct answer is (c) Transfer income.

This tests which receipts form part of national income in CHSE Odisha +2 Business Economics.

National income is the sum of all factor incomes earned by the normal residents of a country for their productive services:

• Compensation of employees (b) — wages and salaries — is a factor income, so it is included.

• Operating surplus (a) — rent, interest and profit — is included.

• Mixed income (d) — income of self-employed persons — is included.

• Transfer income (c) — pensions, scholarships, old-age allowances, gifts — is a one-sided payment with no productive service in return, so it is excluded from national income (counting it would mean double counting or counting non-production).

The correct answer is (b) Rs. 40,000 crore.

This is a standard national-income relationship in CHSE Odisha +2 Business Economics.

The link between Gross National Product (GNP) and Gross Domestic Product (GDP) is:

• GNP = GDP + Net Factor Income from Abroad (NFIA)
• Rearranging: GDP = GNP − NFIA

Given GNP = Rs. 60,000 crore and NFIA = Rs. 20,000 crore:

GDP = 60,000 − 20,000 = Rs. 40,000 crore.

The statement is incorrect; flour for a bread factory is an intermediate good, not a final good.

This is a correct-the-statement item in CHSE Odisha +2 Business Economics, keeping the underlined part — 'Flour for a bread factory is ... good' — unchanged.

• A final good is purchased for final consumption or investment and is not resold or further processed within the year.
• An intermediate good is used up as a raw material or input in producing other goods for sale.

Flour bought by a bread factory is transformed into bread and sold, so its value gets embodied in the final product (bread). Counting it separately would cause double counting. Hence it is an intermediate good. (The same flour bought by a household for direct consumption would be a final good — classification depends on use.)

The statement is correct — net indirect taxes equal indirect taxes minus subsidies.

This is a correct-the-statement item in CHSE Odisha +2 Business Economics.

Indirect taxes (like GST, excise, customs) raise the market price of goods above factor cost, while subsidies lower it. The net effect on the gap between market price and factor cost is captured by:

• Net Indirect Taxes (NIT) = Indirect Taxes − Subsidies.

This is the exact adjustment used to convert national income at factor cost to national income at market price (and vice versa). The statement reproduces this definition correctly, so no correction is needed.