A mill buys cotton worth ₹50 lakh in a year. It uses cotton worth ₹42 lakh to make cloth and keeps the rest in its store at the end of the year. The ₹8 lakh of cotton in store is treated as

an intermediate good, left out of the year's outputCorrect answerYour answera consumption good of the mill ownerCorrect answerYour answerdepreciation of the mill's capitalCorrect answerYour answera final good, as an addition to inventory (investment)Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

Cotton used up this year (₹42 lakh) is intermediate.
Cotton not used up (₹8 lakh) is an addition to the firm's stock of inventory, which is investment, a final use.

Concept: Unused inputs are inventory investment
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsFinal and intermediate goods

Practise this chapter →

Ten questions from Basic Concepts & the Circular Flow, at your own pace.

A mill buys cotton worth ₹50 lakh in a year. It uses cotton worth ₹42 lakh to make cloth and keeps the rest in its store at the end of the year. The ₹8 lakh of cotton in store is treated as

Explanation