Consider a firm producing car parts in Oshawa,Ontario.In determining this firm's value added to national income,we would start with its total revenue and subtract the cost of (among other things)
1)imported plastic molds;
2)labour costs for sales and marketing;
3)computer-aided design (CAD)equipment.

Question

Quizplus · Accepted Answer

Value added is the difference between revenue generated from the sale of a good or service and the costs of intermediate inputs used in its production. In this case, the cost of imported plastic molds and computer-aided design (CAD) equipment are intermediate inputs used in the production process, and therefore should be subtracted from the firm's revenue. Labor costs for sales and marketing, on the other hand, are considered a value-added activity since they help to promote and sell the product, which ultimately generates revenue for the firm. Therefore, the correct answer is C) 1 and 3.

Consider a Firm Producing Car Parts in Oshawa,Ontario