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
Anurag Pathak Changed status to publish December 13, 2023
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
Anurag Pathak Changed status to publish December 13, 2023
