If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000 from another firm,earns profits of $800,and sells its output for $25,000,the value added by the firm is _____.

Question

Quizplus · Accepted Answer

Value added is calculated by subtracting the cost of inputs (labor, rent, raw materials) from the revenue generated by selling the output. Therefore, value added = $25,000 - ($6,000 + $2,000 + $10,000) = $7,000 + $8,000 = $15,000. Therefore, the correct answer is (C).

If a Firm Hires Labor for $6,000,pays Rent of $2,000,buys