You own a business.You purchase $6,500 in land, labor and capital to produce widgets.Your business produced 150 units of widgets and sold them for $25 each.The value added is

Question

Quizplus · Accepted Answer

Value added is calculated by subtracting the cost of inputs from the revenue generated. Revenue generated from selling 150 units of widgets at $25 each is $3,750. Therefore, the value added is $3,750 - $6,500 = -$2,750. This negative value indicates that the company did not make a profit and actually lost money in the production and sale of widgets. The only answer choice that takes into account the revenue generated and cost of inputs is B, but the negative value indicates a loss rather than a profit.

You Own a Business