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National Income Accounting
Question
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What is the impact of a subsidy on the price of a commodity on which it is granted?

Answer

The effect of subsidy is fall in the price of a commodity. For example, Delhi Milk Scheme sells 1 litre poly bag of toned milk for र 20.00 whereas the same costs it र 21.00. The difference or loss of र 1.00 is made good by the Government by giving subsidy of Re. 1.00 per litre of toned milk. Thus the market price of a subsidised commodity is lower than its factor cost.

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Some More Questions From National Income Accounting Chapter

Distinguish between microeconomics and macroeconomics. Give an example of showing the difference between microeconomics and macroeconomics.

Briefly explain the following basic concepts related to NI:
 National Income (NI).

Briefly explain the following basic concepts related to NI:
Final Goods and Intermediate Goods. 

Briefly explain the following basic concepts related to NI:
Consumption Goods and Capital Goods

Briefly explain the following basic concepts related to NI:
Flow and Stock Concepts

Briefly explain the following basic concepts related to NI:
Gross Investment and Net Investment

Briefly explain the following basic concepts related to NI:
Domestic (Economic) Territory

Briefly explain the following basic concepts related to NI:
Normal Residents

Briefly explain the following basic concepts related to NI:
National Income at Current and Constant Prices (Nominal and Real NI).

Briefly explain the following basic concepts related to NI:
Consumption of Fixed Capital (Depreciation).