An economy has three firms. Their data for a year (Rs crore) are:
| Firm | Value of output | Intermediate goods used |
|---|---|---|
| X | 300 | 0 |
| Y | 500 | 200 |
| Z | 700 | 350 |
What is the GDP of the economy?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs 950 crore
Given:
Firm X: output 300, intermediate goods 0
Firm Y: output 500, intermediate goods 200
Firm Z: output 700, intermediate goods 350
GDP is the sum of the gross value added of all firms. Value added = value of output − intermediate goods.
Value added of X = 300 − 0 = 300
Value added of Y = 500 − 200 = 300
Value added of Z = 700 − 350 = 350
GDP = 300 + 300 + 350 = Rs 950 crore
Rs 1,500 crore adds all output and counts the intermediate goods twice.
NCERT (2026-27): “2.2.1 The Product or Value Added Method … If we sum the gross value added of all the firms of the economy in a year, we get a measure of the value of aggregate amount of goods and services produced by the economy in a year (just as we had done in the wheat-bread example). Such an estimate is called Gross Domestic Product (GDP). Thus GDP ≡ Sum total of gross value added of all the firms in the economy. …” |