The Compagnie Naturelle sells mounted butterflies,using butterfly bait it buys from another firm for $20,000.It pays its workers $35,000,pays $1000 in taxes,and has profits of $3000.What is its value added?
A)$3000
B)$19,000
C)$39,000
D)$59,000

Question

Quizplus · Accepted Answer

Value added is the difference between the value of the output and the value of the inputs. In this case, the value of the output is the $3000 profit plus the $1000 in taxes, or $4000. The value of the inputs is the $20,000 in butterfly bait plus the $35,000 in wages, or $55,000. Therefore, the value added is $4000 - $55,000 = $39,000.

The Compagnie Naturelle Sells Mounted Butterflies,using Butterfly Bait It Buys