A tannery buys hides for Rs 2 million and sells the leather for Rs 3.2 million. A factory buys that leather and sells jackets for Rs 7 million. Which stage adds more value?
- Tanning: 3.2 − 2 = Rs 1.2 million added.
- Jacket making: 7 − 3.2 = Rs 3.8 million added.
- Check: 1.2 + 3.8 = 5, which equals 7 − 2, the total value added to the hides.
Answer: Making jackets adds more (Rs 3.8 million against Rs 1.2 million), so exporting finished goods earns more than exporting leather.