Value added refers to which of the following?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Value of output - intermediate consumption.
Value added is a key concept in national income accounting. It refers to the net contribution made by a producer at each stage of production. It is calculated as:
Value Added = Value of Output − Intermediate Consumption
Where:
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Value of output is the total value of goods and services produced.
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Intermediate consumption includes the value of goods and services used up in the production process.