A firm's value added can be measured as the value of its

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Value added represents the increase in value that a firm creates in its production process. It is calculated as the difference between the value of a firm's total sales and the value of its purchases of inputs from other firms. This measure captures the unique contribution of the firm to the economy and reflects the efficiency and productivity of its operations. Profits and total sales do not account for the cost of inputs, whereas purchases of inputs from other firms do not capture the value added by the firm itself.

A Firm's Value Added Can Be Measured as the Value