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Question : A company produces goods worth INR 1,000,000 and incurs intermediate consumption of INR 300,000. It pays wages of INR 200,000 and earns profits of INR 100,000. What is the value added by the company?

 

Option 1: INR 300,000

Option 2: INR 500,000

Option 3: INR 700,000

Option 4: INR 900,000


Team Careers360 17th Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: INR 700,000


Solution : The correct answer is  (c) INR 700,000

To calculate the value added by the company, we need to subtract the intermediate consumption (cost of goods and services used in production) from the total value of goods produced.

Given:

Total value of goods produced: INR 1,000,000

Intermediate consumption: INR 300,000

To find the value added, we subtract the intermediate consumption from the total value of goods produced:

Value added = Total value of goods produced - Intermediate consumption

Value added = INR 1,000,000 - INR 300,000

Value added = INR 700,000

Therefore, the value added by the company is INR 700,000.

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