How do we count the various goods and services and know the total production in each sector 0?
Answers
We calculate GDP to count value of goods and services. It is the market value of final goods and services produced in a country in a year. (i) The final value of goods and services produced in a sector is calculated. (ii) Only the final value of a product or service is taken into, account to avoid double counting. For example, suppose a farmer sells wheat to a flour mill for ? 8. The mill grinds it and sells it to a baker for ? 10 and then baker after converting it into a bread sells to a consumer for ? 20. Here the final product is bread so ? 20 should be added not ? 8 + ? 10 + ? 20 = ? 38. • only the value of final goods is calculated because the value of final goods includes the value of all intermediategoods that are used in making the finalgoods.