Question

What precautions should be taken while estimating total production

Answer 1

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

Answer 2

Answer:

While estimating the total production, only final value of the good and service should be taken into account in order to avoid double counting. Expenditure on the second hand goods, shares and bonds, transfer payments, self use of own produced goods etc. should not be included.