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Consider the following statements:
1. Production taxes and subsidies are independent of the volume of production.
2. Product taxes and subsidies are paid pair or received per unit product.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements:1. Production taxes and subsidies ar...
Production Taxes and Subsidies:
Production taxes and subsidies are independent of the volume of production. This means that the amount of tax or subsidy imposed on a production process does not change based on the quantity of goods produced. Whether a company produces 100 units or 1000 units, the production tax or subsidy remains constant.
Product Taxes and Subsidies:
Product taxes and subsidies are paid or received per unit product. This implies that for each unit of a product sold, a specific tax needs to be paid or a subsidy is received. The amount of tax or subsidy is directly linked to the quantity of products sold.
Therefore, both statements are correct. Production taxes and subsidies are not dependent on the volume of production, while product taxes and subsidies are based on the number of units sold.
Production taxes and subsidies are independent of the volume of production. This means that the amount of tax or subsidy imposed on a production process does not change based on the quantity of goods produced. Whether a company produces 100 units or 1000 units, the production tax or subsidy remains constant.
Product Taxes and Subsidies:
Product taxes and subsidies are paid or received per unit product. This implies that for each unit of a product sold, a specific tax needs to be paid or a subsidy is received. The amount of tax or subsidy is directly linked to the quantity of products sold.
Therefore, both statements are correct. Production taxes and subsidies are not dependent on the volume of production, while product taxes and subsidies are based on the number of units sold.
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Consider the following statements:1. Production taxes and subsidies ar...
- GVA is the value of total output produced in the economy less the value of intermediate consumption (the output which is used in the production of output further, and not used in final consumption). It is important to understand the concepts such as basic prices, factor cost, and market price to understand GVA. The distinction between factor cost, basic prices, and market prices are based on the distinction between net production taxes (production taxes fewer production subsidies) and net product taxes (product taxes less product subsidies).
- Production taxes and subsidies are paid or received in relation to production and are independent of the volume of production such as land revenues, stamp and registration fees. Product taxes and subsidies, on the other hand, are paid or received per unit or product, e.g., excise tax, service tax, export, and import duties, etc. Hence, statements 1 and 2 are correct.
- Factor cost includes only the payment to factors of production, it does not include any tax. In order to arrive at the market prices, we have to add to the factor cost the total indirect taxes less total subsidies. The basic prices lie in between: they include production taxes (fewer production subsidies) but not product taxes (fewer product subsidies). Therefore in order to arrive at market prices we have to add product taxes (less product subsidies) to the basic prices.
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Consider the following statements:1. Production taxes and subsidies are independent of the volume of production.2. Product taxes and subsidies are paid pair or received per unit product.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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