Case study: An economy has only two firms A and B.
Items (in lacs)
1. Exports by firm A 20
2. Imports by firm A 50
3. Sales to households by firm A 90
4. Sales to firm B by firm A 40
5. Sales to firm A by firm B 30
6. Sales to households by firm B 60
Answer the question on basis of above information.
Gross Domestic Product at market price will be:
Answer & explanation
Correct answer: option 3
The correct answer is option 3: 120 lac
GDP at market Price = Value added by firm A + value added by firm B
Value added by Firm A = Total Sales - total Purchases
=(Exports+ sales to Households +sales to firm B-Imports-Purchase from Firm B)
=(20 + 90 + 40 - 50 - 30)
=70 Lakhs
Value Added by Firm B= (sale to households+ sale to A-Purchase from A)
= (30 + 60 - 40)
=50 Lakhs
GDP at market Price = 70+50=120 Lakhs