The following precautions should be taken while using production method:
(i) Production for self-consumption:
Value of production for self-consumption included in the national income. No doubt this part of the production has been consumed by the producer, but it has been produced.
(ii) Imputed rental value:
ADVERTISEMENTS:
Imputed rental value of the self-occupied house is included in the national income.
(iii) Sale price of second-hand goods:
Sale price of second-hand assets is not included because their values were counted in the year when they were produced.
(iv) Value of own-account production:
ADVERTISEMENTS:
Value of own-account production by the households and government is included in the national income.
(v) Services of house-wives:
Services of house-wives are not included, because their value cannot be estimated.
(vi) Value of intermediate goods:
ADVERTISEMENTS:
Value of intermediate goods is not included in the national income. This is done to avoid the problem of double counting.
(vii) Commission of brokers:
Commission of brokers related to the sale of second and items is Hided in the national income because they render productive service.