Value added refers to the increase in market value of a product that takes place at each stage of the production process. It is the difference between the value of inputs and the value of outputs at each stage of production. This is the most accurate definition of value added. A, C, and D descriptions do not accurately capture the concept of value added.

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Value Added Is the

Question 29

Multiple Choice

Value added is the

A) Addition to GDP because nonmarket activities are captured.
B) Increase in market value of a product that takes place at each stage of the production process.
C) Difference between nominal GDP and real GDP.
D) Impact on third parties caused by market activities.

Correct Answer: