The value added of a ﬁrm is the market value of
A) a ﬁrm's output plus the value of the inputs bought from others.
B) a ﬁrm's output less the value of the inputs bought from others.
C) the ﬁrm's output.
D) the ﬁrm's inputs bought from others.

Question

Quizplus · Accepted Answer

The value added of a firm is the difference between the value of the firm's output and the cost of the inputs it purchased from other firms. It represents the contribution of the firm to the overall economy and is a measure of the firm's economic efficiency. Therefore, option B is the best choice as it correctly represents the concept of value added.

The Value Added of a ﬁRm Is the Market Value