Question : A company produces goods worth INR 1,500,000. It incurs intermediate consumption of INR 500,000 and pays wages of INR 300,000. The company also receives indirect taxes of INR 200,000 and subsidies of INR 100,000. What is the value added by the company?
Option 1: INR 400,000
Option 2: INR 500,000
Option 3: INR 800,000
Option 4: INR 700,000
Correct Answer: INR 800,000
Solution : The correct answer is (c) INR 800,000
Total value of goods produced: INR 1,500,000
Intermediate consumption: INR 500,000
Wages: INR 300,000
Indirect taxes: INR 200,000
Subsidies: INR 100,000
To calculate the value added, we can use the formula:
Value added = Total value of goods produced - Intermediate consumption - Wages + Indirect taxes - Subsidies
Value added = INR 1,500,000 - INR 500,000 - INR 300,000 + INR 200,000 - INR 100,000
Value added = INR 800,000
Therefore, the value added by the company is INR 800,000.
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