prices of which type of good should be taken account while calculating the total production of a nation? why?
Answers
Answer:
Value Added Method:
To obtain national product figure of a country, we aggregate the money value of all final goods and services produced in a country in a year. The figure that we obtain is called GNP or GDP.
The words ‘money value’ and ‘final’ require little elaboration. We cannot really add up the physical quantities of all goods and services produced in a year. It is meaningless to compute the sum of 10 Indica cars + 70 liters of kerosene oil + 50 meters of cloth
Hope this answers helps you.
Answer:
Final goods are goods that are used for consumption. Intermediate Goods are goods that are used for further production.
Ex. biscuit is a final good. flour, sugar, etc. that are needed to make biscuit is an intermediate good.
For calculating the total production we only consider the prices of the final goods.