Suppose firm $A$ sold timber produced in its forest to firm $B$ for $R s . 1, 000$ and firewood to consumers for fuel for $R s . 500$ , Firm $B$ converted logs into slippers and partly sold to furniture making firm $C$ for $R s . 800$ and the remaining to private consumers for $R s . 700$ . Firm $C$ sold furniture worth $R s . 1, 000$ to private consumers and the remaining to a government office for $R s . 500$ . Calculate:
(i) Values added by firm $A$ , firm $B$ and firm $C$ .
(ii) Total value of output.

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Solution

Value Added by Firm $=$ Sales $-$ Purchase of intermediate goods
(i) Value added by firm $A = R s .1, 000 + R s .500 = R s . 1, 500$ ;
Value added by firm $B = R s . (800 + 700) - R s . 1, 000 = R s . 500$ ;
Value added by firm $C = R s . (1, 000 + 500) - R s . 800 = R s . 700$ .

Total value of output $=$ Sales of firm $A$ + Sales of Firm $B$ + Sales of Firm $C$
(ii) Total value of output $= R s . (1, 500 + 1, 500 + 1, 500) = R s . 4, 500$ .

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