Question

what precautions should be taken while calculating the value of the good and producer.

Answer 1

Precautions (Items to be included /excluded):

While calculating national income by value added method, value of the following items should be included:

(i) Imputed rent of owner occupied houses.

(ii) Imputed value of goods and services produced for self-consumption or for free distribution.

(iii) Value of own-account production of fixed assets by enterprises, government and households.

(iv) Only value added and not value of output by production units should be included (i.e., avoid double counting).

Answer 2

Precautions taken
while estimating total production are:

1.      
Impute the
rent of owner’s occupied houses.



2.   
Impute the
value of goods and services that are manufactured for free distribution or self-consumption.



3.      
Impute the
value of fixed assets of own account production by household, government and
enterprises.



4.      
Value of
output produced by production unit should not be added.



5.      
Anything
that is not freshly produced is not added, example: sale of second hand goods.



Brokerage and commission paid to promote sale are added as they are freshly produced activity