UPSC Prelims 2019 · GS Paper I
Question 79: Economy and Social Development
The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
AnswerUPSC’s answer is (c).
The economic cost of foodgrains to the Food Corporation of India has two parts: the acquisition cost and the distribution cost. Acquisition cost covers the MSP and bonus paid to farmers plus procurement incidentals, such as mandi charges, levies and handling. Distribution cost covers freight, storage, interest and administrative overheads. So the economic cost is the MSP and bonus plus procurement incidentals and distribution cost.
Why each option is right or wrong
- (a) Transportation is only one part of distribution cost.
- (b) Interest is only one part of distribution cost.
- (c) Correct: procurement incidentals and distribution cost complete the economic cost.
- (d) This leaves out the other distribution costs such as freight, handling and interest.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2019, General Studies Paper I, Series A. The paper on upsc.gov.in.