Distinguish between 'Value Addition' and 'Final Value of Output'. Find the Value Added by Firm A, from the following information :

Question

Accepted Answer

Value Addition = Value of Output - Intermediate Consumption
Final Value of Output = Market value of all final goods produced

Given:
- Purchase of factor inputs = 5 crore
- Purchase of non-factor inputs = 2 crore
- Sales to domestic firms = 10 crore
- Imports = 50 crore
- Excess of opening stock over closing stock = 3 crore (change in stock = -3)

Value of Output = Sales + Change in Stock = 10 + (-3) = 7 crore
Intermediate Consumption = Non-factor inputs = 2 crore
(Imports are already included in intermediate consumption when total purchase is given)

Value Added by Firm A = 7 - 2 = Rs. 5 crore