A bakery buys flour for ₹40,000, sugar for ₹12,000, and fuel for ₹8,000, and sells bread for ₹1,10,000. What is its GVA at market prices?
Answer and explanation
Correct answer: ₹50,000
Under the value added method, GVA at market prices equals the value of output minus intermediate consumption. Total intermediate consumption is ₹40,000 + ₹12,000 + ₹8,000 = ₹60,000. Therefore, GVA at MP = ₹1,10,000 − ₹60,000 = ₹50,000. The correct answer is option A; the sales value alone would ignore input costs.
Frequently asked questions
What is the correct answer to this question?
₹50,000
Why is this the correct answer?
Under the value added method, GVA at market prices equals the value of output minus intermediate consumption. Total intermediate consumption is ₹40,000 + ₹12,000 + ₹8,000 = ₹60,000. Therefore, GVA at MP = ₹1,10,000 − ₹60,000 = ₹50,000. The correct answer is option A; the sales value alone would ignore input costs.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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