The concept of value added refers to the
A) increase in the value of a product that occurs at each stage of production.
B) amount subtracted from the value of the goods because of inflation.
C) total value of all intermediate goods used in the production of the final good.
D) amount paid in the final sale of a product or service.
E) amount subtracted from the value of resources because of depreciation.

Question

Quizplus · Accepted Answer

Value added refers to the increase in the value of a product that occurs at each stage of production. It reflects the value contributed by labor, capital, and resources at each stage of the production process. For example, if a farmer produces wheat that is sold for $1 per pound, and a baker takes that wheat and turns it into bread that is sold for $2 per pound, the value added by the baker is $1 per pound.

The Concept of Value Added Refers to the