ECON 1P92 Lecture Notes - Gross Domestic Product, Intermediate Good, Factor Cost

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ECON 1P92 Full Course Notes
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ECON 1P92 Full Course Notes
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Chapter 20 the measurement of national income. Production occurs in stages : many firms produce outputs that are used as inputs by other firms. Intermediate goods (and services): outputs of firms that are used as inputs by ther firms. One company expects it to be its final product, however it used by another company as an input: we need to make sure not to double count these intermediate goods. Final products: outputs that are not used as inputs by any other firms, what is sold to the public. Value added: measures each firm"s contribution to total output (minus intermediate goods, the amount of market value that is produced by that firm (how much do we price in market value on each contribution) Value added = revenue costs of intermediate goods & services: the main thing is to not double count items.

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