Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: $$\begin{array} { l c c }
{ \text { Name of Company } } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Citrus Growers Inc. } & \$ 0.75 & 0 \
\text { Florida Jam Company } & \$ 2.00 & \$ .75 \
\text { The Corner Store } & \$ 2.50 & \$ 2.00
\end{array}$$ What is the value added of Citrus Growers Inc.?

Question

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: $$\begin{array} { l c c } 
 { \text { Name of Company } } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Citrus Growers Inc. } & \$ 0.75 & 0 \
\text { Florida Jam Company } & \$ 2.00 & \$ .75 \
\text { The Corner Store } & \$ 2.50 & \$ 2.00
\end{array}$$ What is the value added of Citrus Growers Inc.?

Quizplus · Accepted Answer

Value added is the difference between the revenue generated from the sale of a good and the cost of purchased inputs used to produce that good. Citrus Growers Inc. only incurs the cost of producing the oranges, which is equal to $0. Thus the value added of Citrus Growers Inc. is equal to its revenue, which is $0.75.

Suppose a Jar of Orange Marmalade That Is Ultimately Sold