The value added by firms A-E from the production of the product described below is:
A)$3,000
B)$3,800
C)$6,500
D)$10,300

Question

The value added by firms A-E from the production of the product described below is: 
A)$3,000 
B)$3,800 
C)$6,500 
D)$10,300

Quizplus · Accepted Answer

The value added by each firm is as follows:
Firm A: $1,000 (Purchase of raw materials)
Firm B: $400 (Value added by processing the raw materials into components)
Firm C: $1,500 (Value added by assembling the components into the finished product)
Firm D: $1,500 (Value added by marketing, advertising, and distributing the finished product)
Firm E: $400 (Value added by providing customer service and support)
Total value added: $4,800
However, the question asks for the value added by firms A-E specifically, which excludes the value added by Firm F. Thus, the answer is $3,800 (the sum of the value added by firms A-E).

The Value Added by Firms A-E from the Production of the Product