Question

Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy:
(I) Firm X sold goods worth ₹ 20,000 to Firm Y and ₹ 12,000 to Firm Z.
(II) Firm Y sold goods worth ₹ 11,000 to Firm X and ₹ 35,000 to Firm Z.
(III) Firm Z sold goods worth ₹ 57,000 to households for final consumption.
On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price (GDP\textsubscript{MP}) in the economy.

Hint:

While calculating GDP, include only the final consumption expenditure to avoid double counting intermediate goods.

Answer 1

To calculate the value of Gross Domestic Product at Market Price (GDP\textsubscript{MP}), we consider the value of final goods and services produced within the domestic territory during a year. Only the final sale to households is counted, while intermediate transactions between firms are excluded to avoid double counting.
Value of goods sold by Firm Z to households = ₹ 57,000 Therefore, \[ GDP_{MP} = ₹ 57,000 \] Final Answer: ₹ 57,000