Match each stage of production in a leather shoe manufacturing process with its correct Value Added contribution to National Income.
- Cattle Ranching (Raw hides sold for ₦4,000; Intermediate inputs = ₦0)Value Added = ₦4,000
- Leather Tanning (Tanned leather sold for ₦10,000; Purchases raw hides for ₦4,000)Value Added = ₦6,000
- Shoe Manufacturing (Shoes sold to retailer for ₦18,000; Purchases tanned leather for ₦10,000)Value Added = ₦8,000
- Retail Distribution (Shoes sold to consumer for ₦25,000; Purchases shoes for ₦18,000)Value Added = ₦7,000
Answer
Cattle Ranching matches Value Added = ₦4,000; Leather Tanning matches Value Added = ₦6,000; Shoe Manufacturing matches Value Added = ₦8,000; Retail Distribution matches Value Added = ₦7,000.
Each stage's contribution to national income is determined by subtracting the value of intermediate inputs purchased from the value of gross output generated at that specific stage.
Step-by-Step Solution
Key Concept
The Output (Value Added) Method calculates National Income by summing the net value added at each production stage (Gross Output minus Intermediate Consumption) to avoid double counting.