Obtaining national output is not simple because firm"s output is another firm"s input. Production happens in stages: firms produce output outputs used as inputs by other fimrs, these firms produce outputs that are used as inputs by other firms. Error that happens in estimating nation"s output by adding all sales of firms is double counting. If we add up values of all sales, same output would be counted everytime that it was sold by one firm to another. Intermediate goods: output of firms used as input by other firms. Final goods: products not used as input by other firms, not in the period of time under consideration. If sale of goods can be categorized between these two, measuring output would simple = the value of all final goods made by firms. Value added: used to avoid double counting is the amount of value firm & workers add to their products over & above costs of intermediate goods.