Fnt¼"P . -~ .

, 1

\,_. ·~_,....'I":""
•_,. : • _1 \ \ Practicals on Value Added '!"ethod

E.xa~ \-; Calc~late the value added b; ; : : ~m B.

-
Particulars
Domesti~ Sales by firm A
(ii) Exports by firm A
(iii) Purchase by firm A
(iv) Sales by firm B
(v) Purchase by firm B
Solution:
Value added by firm A
= Domestic Sales by firm A+ Exports by firm A- Purchase by firm A= 4,000 + 1,000-200=, 4.soo
Ans. t 4,800 crores
Note: 'Exports by firm A' will be included as domestic sales are specifically mentioned.

Value added by firm B

= Sales by firm B- Purchase by firm B = 2,940 - 1,300 = 1,640 crores
Ans. 1,640 crores
Example~ om the_informatio~ given below, calculate:
• Value added by firm f-,.. and firm B; ·
• Gross Domestic Product ~t I?arket price; .
• Net Domestic P,roduct at factor cost.
Particulars \ incro
Sales by firm B to general government
Sales by firm A •
Sales by firm B to households .,
Change in stock offirm A "
Closing stock offirm B
Opening stock offirm B •
Purchases by firm A •
Indirect Taxes paid by both the firms
Consumption of fixed capital
Sales by firm Ato B •
Solution:
Value added by firm A
= Sales by firm A+ Change in stock of firm A- ·Purchases by firm A= 500 + 20 - 320 = t 200 cr()lfS
Ans. "200 crores
Note: Total sales of firm A are given. So, sales by firm A to firm Boff200 crores are not taken se
output of firm A. However, it will be taken in Intermediate consumption of firm 8.
 Measure ment of r lational Income
1pter 4 •

1e added t,y firm B

_ t,y firm B to general govern ment + Sa les by fi rm B to households + (Closing stock of firm 8 _
1
- Sa es . stock of fi rm B) - Purchases by fi rm 8 fro m firm A
Opening
= 100 + 350 + (40 - 30) - 200 = t 260 crores
,. t 260 crores
ss Domestic Product at market price
= Value added by fi rm A + Value added by fi rm B =200 + 260 = t 460 crores
;, t 460 a ores
Domestic Product at factor cost
= Gross Domestic product at market price - Consumption of fixed capital - Indirect Taxes paid by both
the firms
= 460 -1 20- 75 = t 265 crores
i. t 265 crores ,
imple 3.Afom the following data about a firm 'X' for the year 2000-01, calculate the net value
ied atfurket price during that year: (CBSE, Delhi 2003 i
rticulars I f in aores
(i) Sales ,,, 90
ii) Closing stock 25
ii) Opening stock 15
v) Indirect taxes 10
v) Depreciation .,.., 20
ri) Intermediate consumption 40
ii) Purchase of raw materials '
\ 15
ii) Rent 5
ution:
Value Added at Market Price
= Sales + (Closing stock - Opening stock) - Intermediate consumption - Depreciation
=90 + (25 - 15) - 40 - 20 = f 40 crores
. 40 crores

lote: _'P~X, ase of raw materials' is not included sepa~.ately as it is already included in Intermediate Consumption.
mpw rom the following data about firm 'X', calculate gross value added at factor cost
t: / (CBSE, Delhi 2005)
iculars
I t in thousands
I Sales • 500
i) Opening stock , 30
i) Closing stock . 20
) Purchase of intermediate products ' 300
L Purchase of machinery 150
) Subsidy I 40
 Introductory Ma
croec
0~
ct
Solution:
Gross Value Added at Factor Cost
=Sales+ (Closing stock - Opening stock) - Purchase of intermediate products + Subsidy

= 500 + (20 - 30) - 300 + 40 = 230 thousands

Ans.~ 230 thousands
Note: 'Purchase of machinery' is not considered as it is not a part of intermediate consumption.
Exampl~ ))n the basis of the following data, calculate the value of Gross Value Added
at Mark'etPrice: {CBSE, Delhi & AI Corn _(c,
. ~ ;'

Ne1
(ii) Domestic Sales l:
(iii) Change in Stock (-)·
An
(iv) Exports •
(v) Single Use Producer Goods

Solution: Ex,
Gross Value Added at Market Price
= Domestic Sales+ Change in Stock+ Exports - Single Use Producer Goods
=200 + (-)10 + 10-120 = 80 lakh
Ans. 80 lakh
(i
Exa?1ple 6. from the following data relating to a firm, calcul~te its net value added at ~
cost:
. \...¼ -
{CBSE, Sample Paper: . \ (i

(ii) Sales
(iii) Depreciation •
(iv) Exports
(v) Closing stock
(vi) Opening stock
(vii) Intermediate purchases -
(viii) Purchase of machinery for own use
(ix) Import of raw material ,
Solution: (i
Net Value Added at Factor Cost (i j

=(Ii) + (v) - (vi) - (vii) - (iii) + (i) =800 + 20 - 50 - : (i jj

Ans. f 280 Lakhs SOO - 30 + 40 = 280 Lakhs
(Iv
Note: • It is assumed that exports are already . I d . (v
me u ed m Sales
• Import of raw materials Is not Included separately ·t .· (Vi
I
• Subsidy Is added as indirect t . as is a part of Intermediate Purchases.
axes are not given.
 Measurement of National Income

ri
apter4

t ample
•1
ulate Net Value Added at Factor Cost from the following data:
{CBS E, 2020 (58/5/2 )}

· bl producer goods (with a'iife span of 10 years) · __.,_

;0~ (i) Dura e _\
(ii) Single use producer goods
5
20
~(i~ii)~ Sa~le::s~ •---:---~~- - - - ; - - - - - - - - - - - - - - - - - - - - + - - c . . . : _ _~ :___j
(iv) Unsold Goods (Stock) 2
(v) Goods and Services Tax (GST) •

lution: , ,
t Value Added at Factor Cost "\ \ -. { \ \,,
=Sales+ unsold Goods (Stock)- Single usa,e{ odtkerg'f>~ss ·Geods ~~dSe~ ict sTax(GST)- Depreciation*
= 20 + 2 _ s - 1 - 1 = 15 lakhs
s. 15 lakhs ·
. t' * _
Deprec,a Cost of Assets 10 lakhs
ton - E , d ,·& f - = 1 lakh
st,mate 1,e o Assets 1OYears
ample~ alculate the value of 'Change in Stock' from the following data:
{CBSE, 2020 (58/1/1))
articulars in crores
Sales •II
Net Value Added at Factor Cost (NVAFc)
Subsidies "
10
Change in Stock ?
Depreciation 40
Intermediate Consumption 100

culation of'Change in Stock'

NVAFc ='Sales+ Change in Stock- Intermediate Consumption - Depreciation+ Subsidies
plies:
Change in Stock= NVAFc - Sales+ Intermediate Consumption + Depreciation - Subsidies
= 200-400 + 100 + 40 -10 = (- )70 Crores
s. Changep~ o/ck = f (- )70 Crores

ampl~ j(iyln the following data, find Net Value Added at Factor Cost by Sarnbhav
farmer) pr~ ucing wheat: {C BSE, Sample Paper 2021 -22 (Term-2))

(i) Sale ol wheat by the farmer in the local market ', 6,B00

(iii) Procurement of wheat by th~ Government from the farmer ,• 200

(iv) Consumption of wheat by the farming family during the Year ' so
(v) Expenditure on the maintenance of existing capital stoc~ 100
~1-
;vi.:....
) ...:S.:.: id~y _ _, _ _ _ _ _ _ _ _ _ _ _ _·--~_ _L_ _ _ _..1.--_ _ _2_0_
ub::s::.:::
10l
 r,r
Ma,--,
,~
10 Introductory
I
,
Solution:
Net Value Added at Factor Cost
=(i) + (iii) + (iv) + (vi) - (v) =6,800 + 200 + 50 + 20 - 100 = 6,970 crore E,
Ans. 6,970 crore 0
*Expenditure on the maintenance of existing capital stock is an lnte
- 'rnea·
Example 1i JFrom the following data, calculate Net Value Added at Factor CosqNy ·
I JCBSE, 2022 (58/3/JJ\
I

(i) . Price per unit of output

(ii) Output sold (units) I
(iii) Excise duty
(iv) Consumption fixed capital '
1
(v) Change in stock '

(vi) Single use producer goods

Solution:
, Net Value Added at Factor Cost (NVAFcl \~
= {(ii) x (i)} + (v) - (vi) - (iv) - (iii) = (1,250 x 20) + (- 500) - 6,000 - 1,000 - 5,000 = 12,500 crores

rom the following data, calculate Net value added at factor cost.

Decrease in Stock f
(iii) Production for Self Consumption '
(iv) Purchase of raw materials
(v) Exports
(vi) Electricity Charges
(vii) Income Tax
(viii) Goods and Services Tax (GST)
(ix) Subsidy
Solution:
Net Value Added at Factor Cost
= Total Sales+ Production for Self Consumption - Decrease in Stock- Purchase ofraw materials:..E ·

=, .
Charges - (GST - Subsidy)
= 1,000 + 120- 70- 300- 50- (70-40) 670 Crores
\
Ans. f 670 Crores
Note: • Exports will not be taken separately as it is a part of Total Sales. "
• Income Tax is not taken in cafculations as it is a direct tax , -
'• Production for Self Consumption will be separately inc/u~ed in value of output as it also add5to
flow of goods and servif ei and is not included in total sales.
• Intermediate Consumptfon is calculated as sum of (iv) and (vi) item.
1
Measurement of National Income
-lapter4 •
\;j~t om the following data, calculate: (a) Value of output; (b) ~~ termediate
kample 1#1
. .(c) Net value added at factor cost. /
bnsumptton,
• articula•<
· h of raw materials from domestic market
Pure ase
...
~in crores

lncrea~e in the unsol~ .stock ,,, 60

Import pf raw material • ;,, 120

- . 1,200
Domestic Sales ,-:,
(v) Replacement of Fixed Capital "' ,. .so
, 20
(vi) Power Charges u
vii) Exports '" -I#-
40
iii) Im.port of Machinery
(ix) Goods and Services Tax (G_ST) ;::;. 10
30
(x) Subsidy ., -
(xi) Goods used for self Consumption ., 10

lution:
Value of Output
= Domestic Sales+ Exports+ Increase in the unsold stock+ Goods used for self Consumption
=1,200 + 200 + 60 + 10 = 1,470 Crores
Note: • Exports will be included as domestic sales are given .
• Goods used for self Consumption will also be included as it adds to current flow of goods and services.
Intermediate Consumption
= Purchase of raw material from domestic market+ Import of raw material + Power Charges
= 400 + 120 + 20 =~ 540 Crores \

Net value added at factor cost

= Value of Output - Intermediate Consumption - (GST - Subsidy) - Replacement of Fixed Capital
= 1,470-540-(10- 30)- 50 = 900 Crores
-~ ---r-----~
Note: Replacement of Fixed Capital is another name for depreciation.

m the following data, calculate Net Domestic Product at factor cost.

irticulars in Crores
Primary Secondary Tertiary
Sector Sector Sector
I) Sales .,.,/ 1,000 1,500
Net lndirectTaxes 50 30
Opening Stock 50 40 20

Intermediate Consumption ,:; 300 750 250

Consumption of Fixed Capital ,,, 1o 80 60
ution:
Domestic Product at factor cost
= Sales of all sectors - Opening Stock of all sectors - Intermediate Consumption of all sectors -
;, Consumption of Fixed Capital of all sectors - Net Indirect Taxes of all sectors
= (l ,OOO + 1,500 + 700)- (SO+ 40 + 20) - (300 + 750 + 250) - (1 o+ 80 + 60) - (50 + 30 + 0) =? 1,560 Crores
 Introductory Mac
. ro~

Examplet]jl,(suppose, in a hypothetical economy, there are only ~o Firms·A and B.

sold goods,,fur 2,000 to Firm B and purchased goods for~ 1,00~. Firm B exported gI\
cal
2,500 and had domestic sales of~ 1,500. Calculate Net DomeShc Product at market~
E,q:
consumption of fixed capital is~ 200: ,_ . {CBSE, Sample Paper ~ Sol

Firm Value of Output

-
... .-
'

I
A SI
a es t o B
(VO)
2 000
'
Value of Inputs· Purchases 1'000 ,.
Exports 2,500 Purchases from A 2,000 \
B - <
2.(\
Domestic Sales 1,500
Total 6,000 3,000
314
Net Domestic Product at MP= Gross Domestic Product at Market Prn;_e - Consumption of Fixed Ca~
= 3,000 - 2?0 = 2,800 "'-
Example 1s.hft.m A buys from X inputs worth~ 500 crores and sells to firm B goods ~
i 1,000 cro'/etand to firm C goods worth 700 crores. Firm B buys from Y inputs wortht
crores and sells to firm C goods worth i 1,500 crores and finished goods worth~ 2,000 (1
to households. Firm C buys from Z inputs worth~ 150 crores and sells finished goods1- (il
i 4,150 crores to households. Calculate value added by firms A, Band C and GDPMP"
Solution:
Firm Value of output Intermediate Consumption Value Ade,
(VO) (IC) (VA=VO-

A Sales to B: 1,000 Purchase from X: 500 ' (I

+ Safes to C: 700 1,1

B Safes to C:
+ Safes to households:
Safes to households:
1,500
2,000
4,150
Purchase from A:
+ Purchase from Y:
Purchase from A:
1,000

700
-~ !

"'
C I

+ Purchase from B: 1,500 '

\
+ Purchase from Z: 150
Vafue added by firm A= GVAMP of A= i 1,200 crores
Value added by firm B = GVAMP of B=? 2,300 crores
Value added by firm C = GVAMP of C = i 1,800 crores ,
GDPMP= r..GVAMP = 1,200 + 2,300 + 1,800 = 5,300 crores ,

Example & an economy, the following transactions take place: ""' ;

• A sells goods of? 20 crores to B,? 30 crores to C, t 40 crores to households and goodS 1
f 10 crores remain unsold. Value of inputs of firm A is assumed to be zero.
cons:,
~

--------
11
• B sells his output worth? 40 crores to C,? 60 crores to D and~ 50 crores t~ al
• C sells his output worth~ 100 crores to D, 100 crores to households and exports ,
f 100 crores.
•(o sells f 300 crores to households and 100 crores to govemmen/tJ
 Measurement of National Income
, apter4

alculate.. (")1 Value Added by each firm; (ii) Total Value Added; (iii) Total Consumption

irm
Value of output Intermediate Consumption I. t • t

(VO) (IC)
•
Sales to B: 20 Va ue of Inputs: 0
A
+ Sales to C: 30
+ Sales to households: 40
+ unsold stock: 10 100

Sales to C: 40 Purchase from A: 20

B
+Sales to D: 60
+ Sales to households: so 130

C Sales to D: 100 Purchase from A: 30

+ Sales to households: 100 Purchase from B: 40
+ Exports: 100 230
D Sales to households: 300 Purchase from B: 60
+ Sales to Government: 100 Purchase from C: 100 240

i) Value Added by each firm

Value added by firm A -- GVAMP of A -- 100 crores
Value added by firm B = GVAMP of B = 130 crores
Value added by firm C =GVAMP of C = 230 crores
Value added by firm D = GVAMP of D = 240 crores
ii) Total Value Added
GDPMP= "i.GVAMP =100 + 130 + 230 + 240 = 700 crores
(iii) Total Consumption Expenditure
= Sales to households by A+ Sales to households by B+ Sales to households by C+ Sales to households
by D+ Sales to government by D
= 40 + so + 100 + 100 + 300
= t 590 crores
Note: Total Cons ption Expenditure refers to expenditure incurred by households and government on purchase
of go and se~ om different firms.
Example 1 In an economy, industry P sells output to Q. Q sells output to R for~ 600. Q's
value added is½ of P's value added. Assuming P's value of inputs are 0, calculate how much
JP sells to Q.
Solution:
J Suppose, Sales by p to Q = x
Firm
Value of output Intermediate Consumption Value Added
(VO) (IC) (VA=VO-IC)
Value of inputs:
Purchase from P: 600-x
 --,
lntroduct
ory~ac,:

=
Value added by firm P x - o x = '
Value added by firm Q = 600 - x
Given, Q's value added is½ of P's value added

It means: 600 - x = ..!.. x or .l. x =600 or x = 400

2 2
Ans. P sells to Q output worth 400
Example , Jales by Firm A are t 80 crores and sales by firm B are 300
by B and C are equal. Value of output of C and D are 280 crores eachcrores. Vai..
. . A . A' . VaJu ~'It
1s 120 crores and GDPMP 1s 520 crores. sSwrung s value of inputs e a~
(i) Value added by firm Band firm C; (ii) Value of Inputs of firm B; (iii) Value:~elni.ero,~
Puts
Solution: Of1
Given: Value added by firm B= Value added by firm C
Let the value added by firm B= x
It means: Value added by firm B= Value added by firm C = x

Value of Inputs of firm D

= Value of output - Value Added = 280 - 120 = 160
Value of inputs of firm Band firm C are taken as Vl 6 and Vic respectively

Value of output Va lue of Inputs

-
Firm , Value A
(VI)
(VO) (VA av

Sales: Value of inputs: .

B Sales: 300 Value of inputs:

C Sales: 280 Value of inputs:

D Sales: 280 Value of inputs:

Value added by firm A = 80

Value added by firm B = x
Value added by firm C = x
Value added by firm D = 120
GDPMP = S20
It means:
80 + X + X + 120 = 520
2x = 520 - 200 or x = 160 crores
Value of Inputs of firm B
=Value of output - Value Added = 300 - 160 =t 140 crores
Value of Inputs of firm C
=Value of output - Value Added =280 _ 160 = 120 crores
Ans. (i) ~alue added by firm B = Value added by firm c= 160 crores; (ii) Value of Inputs of fi
crores; (111) Value of Inputs of firm C = 120 crores ·
 Measurement of National Income
:hapter4 •
__ A spent~ 500 crores on non-factor inputs and sold goods worth~ 600 crores
:xa_mple z.[';;
0 crores to firm C. Firm B whose ~alue a_dded is 1,000 crores ~old half its
o firm B n C d half to firm D. Value added by firm C 1s ½ of value added of firm D. Firm
t t0 firm an . .
,utpu _ Id their entire output to households. Value of Output of firm C 1s equal to firm
, d Firm Dso .
- an f tput. Calculate value of output of firm D.
l's value o ou

Value Added
(VA=VO-IC)
-
A Sales to B:
+Sales to C: 300 400
- 800 Purchase from A: 600
B Sales to C:
+Sales to D: 800 1,000
Sales to households: 1,600 Purchase from A: 300 '
C
+ Purchase from B: 800
1,800 Purchase from B:
' ,.J 500
D Sales to households: 800 1,000
B's Value of output= Value added+ Intermediate consumption= 1,000 + 600 = t 1,600 crores
C's Value of output= B's Value of output= t 1,600 crores
C's Value Added = 500 = ½ of value added of D
So, D's Value Added= 500 x 2 = t ·l ,000 crores
D'sValue of.output= Value added+ intermediate consumption= 1,000 + 800 = t 1,800 crores
Ans. Value of output of firm D = t 1,800 C! ores
;
Practicals on Income Method

(i) Rent
400
(ii) Royalty
200
(iii) Interest
500
(iv) Compensation of Employees
1,000
(v) Profit
500
(vi) Mixed Income ,
1,000
Solution:
~DP at FC

=Rent + Royalty+ Interest+ Compensation of Employees+ Profit+ Mixed income

= 400 + 200 + 500 + 1,000 + 500 + 1,000 = t 3,600 crores
A~s. 3,600 crores

~xample 21 · From the following data, calculate the value of Gross National Product at Factor
0st
~ (GNPFc): {CBSE, 2022 (58/1/1) Term-2}
Particulars
in crores
(i) Compensation of Employees •
12,000
(ii) Rent and Interest
1,800