Question

Value added means value of:
A) Output at market prices
B) Output less depreciation
C) Output less intermediate cost
D) Output plus intermediate cost

Answer 1

Hint: In the given question, we have been asked the basic, simple meaning of value added. Value added is also known as value addition. Suppose a firm is producing a product, then the output cost of that product is an asset to the firm, while the intermediate cost is a liability.

Complete step by step answer:
The output cost for a product is the market value of that product, which is an asset. While the intermediate cost is the cost occurring because of intermediate consumption which is the total value of the inputs used for making the product, which is a liability.
Hence, the value added or value addition is the output less intermediate cost.

Thus, the correct answer is option C).

Note:
So, we saw that in this question, the most crucial thing to know is the definition of these technical terms. Then, we differentiate the given terms on the basis of asset and liability. Then, all the assets and the liabilities are separately added and then we subtract the latter from the former. And that gives us our answer.