Suppose a company made $40,000 in toys from $1,000 in steel, $5,000 in energy and other material, and $10,000 in plastic. Let its wage bill be
$10,000, its rent $5,000, and its profit $9,000. Its value added would be

Question

Quizplus · Accepted Answer

Value added is calculated by subtracting the cost of materials from the total revenue. In this case, the total revenue is $40,000, and the cost of materials (steel, energy and other material, and plastic) is $1,000 + $5,000 + $10,000 = $16,000. Therefore, the value added is $40,000 - $16,000 = $24,000.

Suppose a Company Made $40,000 in Toys from $1,000 in Steel