Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: $$\begin{array} { l c c }
\text { Name of Company } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Fulton Family Farm } & \$ 0.50 & 0 \
\text { DeLux Popcorn Co. } & \$ 2.50 & \$ .50 \
\text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$ What is the sum of the value added of all of the firms?

Question

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: $$\begin{array} { l c c } 
\text { Name of Company } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Fulton Family Farm } & \$ 0.50 & 0 \
\text { DeLux Popcorn Co. } & \$ 2.50 & \$ .50 \
\text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$ What is the sum of the value added of all of the firms?

Quizplus · Accepted Answer

The value added is calculated as the difference between a firm's revenues and the cost of its purchased inputs. For Fulton Family Farm, the value added is $0.50 - $0 = $0.50. For DeLux Popcorn Co., it is $2.50 - $0.50 = $2.00. For Friendly Groceries, it is $4.00 - $2.50 = $1.50. The sum of these values is $0.50 + $2.00 + $1.50 = $4.00.

Suppose a Jar of DeLux Popcorn That Is Ultimately Sold