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Measuring National Income · Question 3 of 69

Question 3

MediumOriginal question

A farmer sells wheat to a mill for ₹100, the mill sells flour to a baker for ₹160, and the baker sells bread to households for ₹250. Farmer has no inputs. What is the total value added?

Options for question 3

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Value added: farmer 100, mill 160 − 100 = 60, baker 250 − 160 = 90.

  2. Total = 100 + 60 + 90 = ₹250, the value of the final good, bread.

Worth noting

₹510 adds every sale, so the wheat and flour are counted again.

Concept
Sum of value added equals final output
Typical time
70 s
Your time
—
The rule this testsValue added method and double counting
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