If we sum up the value added at every stage of production of a good, we will get:
A) the total cost of the labor used to produce the good.
B) the prices of the factors of production used to produce the good.
C) the final value of the good.
D) the capital-labor ratio.

Question

Quizplus · Accepted Answer

When we sum up the value added at every stage of production of a good, we are essentially adding the value that each producer adds to the good as it moves through the production process. This value added represents the difference between the cost of the inputs used to produce the good and the final price at which the good is sold. Therefore, summing up the value added at every stage of production gives us the final value of the good.

If We Sum Up the Value Added at Every Stage