Using the income method, calculate the Gross Domestic Product (GDP) at market price for Nation Y for the year 2021. The following data (in crore rupees) are given: Compensation of employees = 1,200; Operating surplus (profits of corporations) = 800; Mixed income (profits of unincorporated enterprises) = 250; Rental income = 150; Indirect taxes = 300; Subsidies = 50; Depreciation (consumption of fixed capital) = 200. Assume that net factor income from abroad is zero. Show all steps and present the final GDP figure.

Step-by-step solution

1. Add all factor incomes to obtain GDP at factor cost: Compensation of employees + Operating surplus + Mixed income + Rental income = 1,200 + 800 + 250 + 150 = Rs. 2,400 crore.
2. Convert factor cost to market price by adding indirect taxes and subtracting subsidies: 2,400 + 300 – 50 = Rs. 2,650 crore.
3. Depreciation is not added when computing GDP at market price; it is used later for NDP or GNP calculations, so it is not included here.
4. Since net factor income from abroad is zero, GDP at market price equals GNP at market price for this case.
5. Therefore, GDP at market price = Rs. 2,650 crore.

Concept tested: Income method of GDP

Published 28 September 2026 · How this solution was prepared and checked