CA Foundation P4 · Chapter 5 · Question 3 of 15
A farmer grows wheat worth Rs. 500 (no purchased inputs) and sells it to a miller, who makes flour sold to a baker for Rs. 800. The baker sells bread to consumers for Rs. 1,200. The contribution of this chain to GDP is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 1,200
Explanation
Under the value added method, value added = farmer 500 + miller (800 - 500) 300 + baker (1,200 - 800) 400 = Rs. 1,200, which equals the value of the final good. Adding all sales (500 + 800 + 1,200 = 2,500) double-counts intermediate goods.
More Determination of National Income MCQs
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