# If a farmer sells wheat to miller for ₹ 500 and miller sells flour to baker for ₹ 700 and baker sells bread to consumers for ₹ 1,000, then total value added by ‘miller’ and baker’ is:

If a farmer sells wheat to miller for ₹ 500 and miller sells flour to baker for ₹ 700 and baker sells bread to consumers for ₹ 1,000, then total value added by ‘miller’ and baker’ is:

(a) ₹ 500

(b) ₹ 300

(c) ₹ 1,700

(d) ₹ 1,200

Ans – (a)

**Solution:-**

Let’s first understand the concept of value added in the production process.

Value added refers to the increase in value of the goods that occurs at each stage of production.

It is the difference between the selling price of a product and the cost of the inputs used to produce it.

Value added by Miller

= Value of output – Value of input

= ₹ 700 – ₹ 500 = ₹ 200

Value added by baker

= Value of output – Value of input

= ₹ 1,000 – ₹ 700 = ₹ 300

The total Value added by Miller and Baker is =

= ₹ 200 + ₹ 300

₹ 500