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Question : Find net value added at factor cost if:

i) Durable use producer goods with a life span of 10 years    10

ii) Single-use producer goods     5

iii) Sales       20

iv) Unsold output produced during a year     2

v) Taxes on production 1

Choose the correct alternative

 

Option 1: 14

Option 2: 15

Option 3: 18

Option 4: 20


Team Careers360 13th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: 15


Solution : The correct answer is (b) 15

To calculate the net value added at factor cost, we need to consider the following components:

1. Durable use producer goods with a life span of 10 years: This implies that the value of the durable goods is spread over 10 years. Since the value is given as 10, the annual value added would be 10/10 = 1.

2. Single-use producer goods: The value added from single-use producer goods is given as 5.

3. Sales: The value added from sales is given as 20.

4. Unsold output produced during a year: The value added from unsold output is given as 2.

5. Taxes on production: 1

Net value added at factor cost = Sales + Unsold output -  Single-use producer goods -  Durable use producer goods- Taxes on production

Net value added at factor cost = 20 + 2 - 5 - 1 - 1 = 15

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