If output value is 2000 and intermediate consumption is 800, what is value added?
Answer and explanation
Correct answer: 1200
The production-method formula is Value Added = Output Value − Intermediate Consumption. Substituting the given figures gives 2000 − 800 = 1200. Therefore, option A is correct. The value 2800 results from incorrectly adding the two figures, while 800 and 2000 are only the separate input values, not the newly created value. Subtracting intermediate consumption prevents double counting.
Frequently asked questions
What is the correct answer to this question?
1200
Why is this the correct answer?
The production-method formula is Value Added = Output Value − Intermediate Consumption. Substituting the given figures gives 2000 − 800 = 1200. Therefore, option A is correct. The value 2800 results from incorrectly adding the two figures, while 800 and 2000 are only the separate input values, not the newly created value. Subtracting intermediate consumption prevents double counting.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Value Added/Product Method.
