Value added refers to which of the following?

The correct answer is Option (2) → Value of output - intermediate consumption.

Value added is the net contribution of a firm: the value of what it produces minus the intermediate goods it uses up.

Intermediate goods are the raw materials a firm buys from another firm and uses up in production. Suppose a baker makes bread worth ₹200 with wheat worth ₹50. The baker’s value added is ₹150, because the wheat is already counted in the farmer’s output.