Assertion (A): Tea leaves used by a restaurant to brew tea for its customers are not counted separately while calculating GDP.
Reason (R): Tea leaves remain final goods even when a restaurant uses them to brew tea for sale.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) is true but (R) is false.
Assertion (A): Tea leaves used by a restaurant to brew tea for its customers are not counted separately while calculating GDP. — True. In a restaurant, tea leaves are inputs. Their value is already inside the price of the tea sold, so counting them again would be double counting.
Reason (R): Tea leaves remain final goods even when a restaurant uses them to brew tea for sale. — False. When a restaurant brews tea for sale, tea leaves cease to be final goods and become inputs.
Whether a good is final depends on how it is used, not on what it is.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … However, if the same cooking or tea brewing was done in a restaurant where the cooked product would be sold to customers, then the same items, such as tea leaves, would cease to be final goods and would be counted as inputs to which economic value addition can take place. Thus it is not in the nature of the good but in the economic nature of its use that a good becomes a final good. …” “2.1 Some Basic Concepts of Macroeconomics … However, since we are dealing with value of output, we should realise that the value of the final goods already includes the value of the intermediate goods that have entered into their production as inputs. Counting them separately will lead to the error of double counting. …” |