Question

State the importance of distinction between final and intermidiate goods, any 3

Answer 1

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Final goods are those goods which have crosses the boundary line of the production ...

Final goods are those in which no more value is to be added ...

While,

Intermediate goods r those which r not ready to use yet not crossed the production...

More value is to be added in next stage..

Distinction is important because..

• Addition of value of intermediate goods cause the double counting of value in national income..

• It cause the wrong estimation of National income..

• Only final goods are counted in national income..

Thank you

Answer 2

Final goods :-

1. It contains value of all intermediate goods.
2. Ready for consumption by people
3. Yields higher margin

Intermidiate Goods :-

1. Valued only for specific item
2. Not ready to be sold
3. Yields less profit.

importance of Distinction :-

The value of only final goods are counted as it already involve value of intermidiate goods.

Only final goods are counted while calculation of GDP

If we count intermediate goods also, we will be counting the same values again.