Assertion (A) : Intermediate goods are used up in producing final goods and services. Reason (R) : The value of final goods does not include the value of all the intermediate goods that are used in making the final goods.
Answers
Answer: Assertion (A) : Intermediate goods are used up in producing final goods and services. Reason (R) : The value of final goods does not include the value of all the intermediate goods that are used in making the final goods.
Explanation:
Assertion (A) is correct, while the Reason (R) is incorrect.
Assertion (A) is correct because many products require intermediate goods. Intermediate goods are those products that are added to, combined with, or assembled with other products to produce a final product. For example, mustard oil is an intermediate product in the production of pickles. Similarly, microchip processors are intermediate products because they are used in the production of laptops (which is the final product).
Reason (R) given here says that the final product does not include the price of the intermediate goods. This is obviously false because you can decide the price of the final product only after adding up the prices of everything that went into it, including the intermediate goods. If you do not consider the price of mustard oil while deciding the selling price of a bottle of pickle, you will go into losses, especially because mustard oil is an important ingredient and is expensive as well. Without considering the value of the intermediate goods, you cannot get the right costing or the selling price or even make a profit. And generating profit is the basis of business.