Question : The value added of a firm is calculated as___________.
Option 1: value of production of the firm - value of intermediate goods used by the firm.
Option 2: value of production of the firm + value of capital goods used by the firm.
Option 3: value of production of the firm / value of intermediate goods used by the firm.
Option 4: value of production of the firm + value of intermediate goods used by the firm.
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Correct Answer: value of production of the firm - value of intermediate goods used by the firm.
Solution : The correct answer is the value of production of the firm - the value of intermediate goods used by the firm.
The value that an organization adds to a raw material or intermediate good during the production process is referred to as value-added. The value-added approach uses the difference between the output and intermediate product values to compute the national income. Value Added is equal to Output Value (Intermediate).
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