A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called
A) profit.
B) investment.
C) value added.
D) production costs.
E) intermediate costs.

Question

Quizplus · Accepted Answer

Value added is the difference between a firm's revenue and the cost of inputs purchased from other firms. It is a measure of the firm's contribution to the economy and its ability to generate profits. Profit (A) is the excess of revenue over all costs, including production costs and intermediate costs (E). Investment (B) refers to the allocation of resources to increase future production or income. Production costs (D) include all costs involved in the process of production, such as labor, materials, and overheads.

A Firm's Revenue from Selling Its Product Minus the Cost