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Question : A company produces goods worth INR 2,000,000 and incurs intermediate consumption of INR 800,000. It pays wages of INR 500,000 and earns profits of INR 300,000. Additionally, the company pays indirect taxes of INR 200,000. What is the value added by the company?

 

Option 1:  INR 500,000

Option 2: INR 700,000

Option 3: INR 900,000

Option 4: INR 1,100,000


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: INR 900,000


Solution : The correct answer is  (c) INR 900,000

Total value of goods produced: INR 2,000,000

Intermediate consumption: INR 800,000

Wages: INR 500,000

Profits: INR 300,000

Indirect taxes: INR 200,000

To calculate the value added, we can use the formula:

Value added = Total value of goods produced - Intermediate consumption - Wages - Indirect taxes + Profits

Value added = INR 2,000,000 - INR 800,000 - INR 500,000 - INR 200,000 + INR 300,000

Value added = INR 900,000

Therefore, the value added by the company is INR 900,000.

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