CA Foundation · Business Economics · Indian Economy
The government procures 40 lakh tonnes of wheat at an MSP of ₹2,000 per quintal. Given that 1 tonne equals 10 quintals, what is the total procurement cost at MSP (ignoring all other costs)?
The total cost is ₹8,000 crore. Forty lakh tonnes equals four crore quintals, since one tonne is ten quintals. Multiplying four crore quintals by the MSP of ₹2,000 per quintal gives ₹8,000 crore. Using 100 quintals per tonne would wrongly inflate the figure.
- A₹8,000 croreCorrect
- B₹80,000 crore
- C₹8,000 lakh crore
- D₹800 crore
Explanation
40 lakh tonnes = 40,00,000 tonnes x 10 = 4,00,00,000 quintals. Cost = 4 crore x ₹2,000 = ₹8,000 crore. Working backwards, ₹8,000 crore / ₹2,000 = 4 crore quintals, which matches. The ₹80,000 crore option arises from treating a tonne as 100 quintals.
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