| Firm A | Firm B | |
| Sale | 200 | 500 |
| Inter mediate Consumption | 0 | x |
| Value |
If GDP = 600, then Intermediate consumption of firm B is :
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : 100
- Firm A: Sales : 200, Intermediate Consumption : 0
- Firm B :- Sales : 500, Intermediate Consumption : ?
For Firm A: Value Added (A) = Sales (A) - Intermediate Consumption (A)
= 200- 0 = 200
The Gross Domestic Product (GDP) is given as 600.
GDP is calculated by summing up the value added at each stage of production. The value added is the difference between sales and intermediate consumption.
GDP = Value Added (A) + Value Added (B)
600 = 200 + Value Added (B)
Value Added (B)= 400
Now, For Firm B :
Value Added (B) = Sales (B) - Intermediate Consumption (B)
400 = 500 - Intermediate Consumption (B)
Intermediate Consumption (B) = 500-400 = 100