Value added is the value of a firm's output minus:
A)the value of intermediate goods purchased from other firms.
B)the compensation it pays to employees.
C)the value of its capital goods.
D)its depreciation.

Question

Quizplus · Accepted Answer

Value added is calculated by subtracting the value of intermediate goods purchased from other firms from the total value of a firm's output. This represents the value added by the firm's own production processes. The compensation paid to employees, value of capital goods, and depreciation are not subtracted from the firm's output to calculate value added.

Value Added Is the Value of a Firm's Output Minus