Chapter 2 National Income - Part 3 Value Added Method

Economics Class 12
Macroeconomics

#### What is Gross Value Added at Factor Cost?

We know that

GDP at Market Price is equal to Total Value Added by All Sectors/Companies

From this Net Indirect Taxes is Reduced

So we get Gross Value Added at Factor Cost

 GDP Mp (Gross Value Added at Market Price) xx Less  Net Indirect Taxes (Tax-Subsidy) xx Gross Value Added At Factor Cost xx

Example 4

#### Calculate Gross Value added at Factor Cost

 Particulars Amt in thousands Sales 500 Opening Stock 30 Closing Stock 20 Purchase of Intermediate Products 300 Purchase of Machinery 150 Subsidy 40

#### Note

Net Indirect Taxes

= Taxes - Subsidy

= 0 - 40

= - 40

Sometimes Value of Output is not given in question

It is calculated by multiplying Quantity and Price per unit

OUTPUT=Price per Unit* No of Units Sold

Example 10

#### Calculate Gross Value added at Factor Cost

 Particulars Amt Units of Output Sold 1000 Price per unit of output 30 Depreciation 1000 Intermediate Cost 12000 Closing Stock 3000 Opening Stock 2000 GST 6000

Sometimes Sales, Opening and Closing Stock is given in Question

We have to calculate value of Output

= Sales + Change in Stock

= Sales + Closing Stock-Opening Stock

Example 5

#### Calculate Gross Value Added at Market Price

 Particulars Amt in lakhs Depreciation 20 Domestic Sales 200 change in stock -10 Exports 10 Single use Producer goods 120 Net Indirect Taxes 20

## NCERT Questions

No questions in this part

Learn in your speed, with individual attention - Teachoo Maths 1-on-1 Class

### Transcript

What is Gross Value Added at Factor Cost? We know that GDP at Market Price is equal to Total Value Added by All Sectors/Companies From this Net Indirect Taxes is Reduced So we get Gross Value Added at Factor Cost GDP Mp (Gross Value Added at Market Price) xx Less Net Indirect Taxes (Tax-Subsidy) xx Gross Value Added At Factor Cost xx Example 4 Calculate Gross Value added at Factor Cost Particulars Amt in thousands Sales 500 Opening Stock 30 Closing Stock 20 Purchase of Intermediate Products 300 Purchase of Machinery 150 Subsidy 40 -a- -ea- Note Net Indirect Taxes = Taxes - Subsidy = 0 - 40 = - 40 Sometimes Value of Output is not given in question It is calculated by multiplying Quantity and Price per unit OUTPUT=Price per Unit* No of Units Sold Example 10 Calculate Gross Value added at Factor Cost Particulars Amt Units of Output Sold 1000 Price per unit of output 30 Depreciation 1000 Intermediate Cost 12000 Closing Stock 3000 Opening Stock 2000 GST 6000 -a- -ea- Sometimes Sales, Opening and Closing Stock is given in Question We have to calculate value of Output = Sales + Change in Stock = Sales + Closing Stock-Opening Stock Example 5 Calculate Gross Value Added at Market Price Particulars Amt in lakhs Depreciation 20 Domestic Sales 200 change in stock -10 Exports 10 Single use Producer goods 120 Net Indirect Taxes 20 -a- -ea- NCERT Questions No questions in this part