Question

In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.

Answer 1

(i) GDP_MP = Rs.500 ............[Barber collects from haircut]

(ii) NNP_MP = GDP − Depreciation

= 500 − 50

= Rs.450

(iii) NNP_FC = NNP − Sales tax

= 450 − 30

= Rs.420

(iv) PI = NNP_FC − Retained earnings

= 420 − 220

= Rs.200

(v) PDI = PI − Income tax

= 200 − 20

= Rs.180