Output Comprises All

Output Comprises All

Output, comprises all the goods and services resulting from the economic activity of an individual, a firm, an industry or a country. In accordance with statistical practice, they are measured at the points where they emerge from the production process. Problems of definition frequently arise; thus in personal services where the unit of output is not apparent the appropriate measure is usually determined by considering what the producer is under contract to provide, or what the purchaser actually obtains in a given period, say a year. There are also difficulties in estimating the contribution to total output of Government services which are not bought or sold in a market but are generally provided free so that it is not possible to use the criterion of market contract. In these cases the solution is to decide ad hoc on the measure most likely to reflect movements in the output of the service, e.g. the number of patients handled by hospitals, the number of children taught in schools, or the number of cases tried in courts of justice.

Output is normally understood to be gross output; but in the course of production the firm or country will have used goods and services produced by other firms or countries. The most useful definition of output therefore relates to gross output less the goods and services used in production: this amount is called net output. Thus machinery and equipment will probably have depreciated through use, and a deduction is therefore normally made from net output as allowance for wear and tear.

Net output has frequently been called gross product; in these terms gross product after provision for depreciation becomes net product. The total of the net outputs (or gross products) of all the units of production in an economy is the net domestic output, more commonly known as the gross domestic product. Statistics of the components of the gross domestic product are published in the U.K. annually in the H.M.S.O. publication National Income and Expenditure. The estimates of output are derived for the whole range of industry and trade, and are based on indices of output for the industries and trades. Their accuracy varies from industry to industry because in some the contribution to total output is much more easily identifiable and measurable than in others.

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