Double Counting can be avoided by summing up total output of all firms
True of False with Reasons:
Double Counting can be avoided by summing up total output of all firms.
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False,
Double Counting can be avoided either by taking the value of final output or by taking value added by each producing unit.
Explanation:-
Let’s understand with an example:
The farmer produces goods and sale it to dealer for ₹ 2,000
dealer sells it to the retailer for ₹ 2,500
The retailer sells it to the consumer for ₹ 2,800
If the value of final goods is taken
Total output = ₹ 2,800
If the value of value added is taken then
Value added by farmer = ₹ 2,000
Value added by dealer = ₹ 500 (₹ 2,500 – ₹ 2,000)
Value added by retailer = ₹ 300 (₹ 2,800 – ₹ 2,500)
Total value of output = ₹ 2,00o + ₹ 500 + ₹ 300 = ₹ 2,800
Total value of output = ₹ 2,800
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