Social Science (087) — AI-generated practice question

No, the student is not correct.

Timber worth ₹10,000 is an intermediate good — it is used up in making the chairs. The chairs sold for ₹35,000 are the final good that reaches the consumer.

The value of the final good (₹35,000) already includes the value of the intermediate good (timber). Counting both would mean counting the value of timber twice — once as raw material and again as part of the finished chair.

Therefore, the correct amount to count towards GDP is only ₹35,000 (the value of the final good).

GDP is the value of all final goods and services produced within a country during a particular year.

Source: Sectors of the Indian Economy, How do we count the various goods and services

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• Examiners want three things here: (1) identify the error, (2) explain the intermediate/final goods distinction, (3) state the correct figure.
• The key concept is double counting — if intermediate goods are added separately, their value gets counted more than once.
• Always link back to the definition of GDP: value of all final goods and services.
• The textbook uses the wheat→flour→biscuit example for exactly this concept; the chair example here follows the same logic.