Value added by a ﬁrm is the market value of the ﬁrm's output minus the
A) total wages paid to its employees.
B) value of inputs bought from other ﬁrms.
C) proﬁts that the ﬁrm's owners earn.
D) total costs of all inputs used.

Question

Quizplus · Accepted Answer

Value added by a firm is calculated by taking the market value of the firm's output and subtracting the value of inputs bought from other firms. This represents the contribution that the firm has made to the economy, as it does not include the costs of inputs purchased from other firms.

Value Added by a ﬁRm Is the Market Value of the ﬁRm's