16. On the basis of the following data about an economy which consists of only two firms, find out a) Value added by firm a and firm b and b) Gross value added or gross domestic product at factor cost. Rs in lakh items Sale by firm a Purchases from firm b by firm a Purchases from firm a by firm b Sales by firm b Closing stock of firm a Closing stock of firm b Opening stock of firm a Opening stock of firm b Indirect taxes paid by both firms 100 40 60 200 20 35 25 45 30
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Verified answer
Answer:
To calculate the value added by each firm, we can use the formula:
\[ \text{Value Added} = \text{Sales} - \text{Purchases from other firms} \]
a) Value added by firm A:
\[ 100 - 60 = 40 \text{ Rs lakh} \]
Value added by firm B:
\[ 200 - 40 = 160 \text{ Rs lakh} \]
b) Gross value added or gross domestic product at factor cost is the sum of the value added by all firms. Therefore:
\[ \text{Gross Value Added (GVA)} = \text{Value Added by A} + \text{Value Added by B} \]
\[ \text{GVA} = 40 + 160 = 200 \text{ Rs lakh} \]
final answer
a) Value added by firm A: 40 Rs lakh
Value added by firm B: 160 Rs lakh
b) Gross value added or gross domestic product at factor cost: 200 Rs lakh
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