Using the national output for calculating national income, Managerial Economics

Using the National Output for Calculating National Income

A final method which is more direct is the "output method" or the value added approach.  This involves adding up the total contributions made by the various sectors of the economy.  "Value Added" is the value added by each industry to the raw materials or processed products that it has bought from other industries before passing on the product to the next stage in the production process.  This approach therefore centres on final products.  Final products will include capital goods as well as consumer goods since while intermediate goods are used up during the period in producing other goods, capital goods are not used up (apart from "wear and tear" or depreciation) during the period and may be thought of as consumer goods "stored up" for future periods. 

Final output will include "subsistence output", which is simply the output produced and consumed by households themselves.  Because subsistence output is not sold in the market, some assumption has to be made to value them at some price.  We also take into account the final output of government, which provides services such as education, medical care and general administrative services.  However, since state education and other governmental services are not sold on the market we shall not have market prices at which to value them.  The only obvious means of doing this is to value public services at what it costs the government to supply them, that is, by the wages bill spent on teachers, doctors, and the like.  When calculating the GDP in this matter it is necessary to avoid double counting.

Posted Date: 11/28/2012 5:56:20 AM | Location : United States







Related Discussions:- Using the national output for calculating national income, Assignment Help, Ask Question on Using the national output for calculating national income, Get Answer, Expert's Help, Using the national output for calculating national income Discussions

Write discussion on Using the national output for calculating national income
Your posts are moderated
Related Questions
The UN's Integrated Programme for Commodities Most of the political pressure for ICAs comes from spokesmen for the developing countries.  This is reflected in countless resolu

THE DETERMINATION OF EQUILIBRIUM NATIONAL INCOME National income is said to be in equilibrium when there is no tendency for it either to increase or for it to decrease.  The a

Danger of over-specialising   A country may feel that in its long-term interests it should not be too specialized. A country may not wish to abandon production of certain

Q. What do you mean by Cost Function? Cost function is a derived function. It's derived from the production function that describes the efficient method of production at any gi

Explain in brief the relationship between TR,AR and MR under perfect market condition.

define scarcity and opportunity cost..

Describe the Managerial decisions Managerial decisions are an important component in the working wheel of an organisation. The failure or success of a business depends upon the

State the types of demand elasticity Income Elasticity: Elasticity of demand with respect to change in consumer's income. Price Expectation Elasticity of Demand: Elast

Disadvantages of Barter Trade It is impossible to barter unless A has what B wants, and A wants what B has. This is called double coincidence of wants and is difficult t

SEARCH THEORIES  -  A BRIEF' HISTORICAL OVERVIEW   A search theory of unemployment is found even in the writings of A. C. Pigou in  the inter-war  period. To explain the  high