Question

Direction: It consists of two statements, one labelled as ‘Statement (I)’ and the others as ‘Statement (II)’. You are to examine these two statements carefully and select the answer using the codes given below:

Statement (I): Raw materials are taken as treaded items and their values at domestic and world prices are estimated.

Statement (II): Raw materials, which have a high value-to-volume ratio and involve proportionately high transport cost and are imported, are regarded as non-treaded items.

1. Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation of Statement (I)
2. Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct explanation of Statement (I)
3. Statement (I) is true but Statement (II) is false
4. Statement (I) is false but Statement (II) is true

Answer 1

Correct Answer - Option 3 : Statement (I) is true but Statement (II) is false

Explanation:

Statement I:

• Raw materials are materials or substances used in the primary production or manufacturing of goods.
• Raw materials are commodities that are bought and sold on commodities exchanges worldwide.
• Non-tradable items are those which are not traded internationally.
• They include items such as services where the customer and producer must be in the same location, and commodities which have low value relative to either their weight or volume.

Statement II:

• In general raw materials are taken as traded items and their value at domestic and world prices are estimated.
• However, raw materials which have a low value to volume ratio and involve disproportionately high transport cost and which are not imported are regarded as non-traded items.