The value of a producer's output minus the value of all intermediate goods used in the production of that output is called the producer's
A) net output.
B) accounting profit.
C) value added.
D) profit margin.
E) costs of production.

Question

Quizplus · Accepted Answer

The value added is the correct term that represents the value of a producer's output minus the value of all intermediate goods used in the production of that output. It is the value that the producer adds to the GDP. Net output (A) is not the correct term as it refers to the total output subtracting the intermediate goods used. Accounting profit (B) is a term used to measure the difference between total revenue and total explicit cost. Profit margin (D) refers to the percentage of revenue that is profit. Costs of production (E) refer to the total cost incurred in producing goods and services.

The Value of a Producer's Output Minus the Value of All