Value added refers to which of the following?

Option 1 -> Refers only to durable goods, not the concept of value addition.

Option 2 -> Correct definition: output value minus intermediate consumption.

Option 3 -> Refers only to non-durable goods, not value addition concept.

Option 4 -> This is what we subtract, not value added itself.

Hence, Option 2: Value of output - intermediate consumption -> Value added is a fundamental concept in national income accounting that measures the value created at each stage of production. It is calculated by subtracting the cost of intermediate goods and services (raw materials, components, etc.) from the total value of output produced. This eliminates double counting and shows the actual contribution of each production unit to the economy. For example, if a bakery produces bread worth $100 using flour and other inputs worth$60, the value added by the bakery is $40 ($100 - $60). -> correct