Correct answer: (c) procurement incidentals and distribution cost
Explanation
- A
transportation cost only
(a) Transportation cost only. Economic cost of FCI grain is wider than freight. Not the key.
- B
interest cost only
(b) Interest cost only. Interest is one incidental, not the whole add-on to MSP. Not the key.
- C
procurement incidentals and distribution cost
(c) Procurement incidentals and distribution cost. Economic cost = MSP (or procurement price) plus procurement incidentals plus distribution cost. That is the official key.
- D
procurement incidentals and charges for godowns
(d) Procurement incidentals and charges for godowns. Godown/storage is only a slice of distribution cost, so the option is incomplete. Not the key.
Summary. Official key is (c). FCI’s economic cost is the sum of acquisition cost (MSP plus procurement incidentals) and distribution cost (freight, handling, storage, interest, transit loss). Transport or interest alone, or incidentals plus godown charges only, understate it. Honour (c).
Same topic · past papers
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