Value added is equal to the value of a company's:
A)sales.
B)sales minus intermediate goods.
C)intermediate goods.
D)payments to labor and capital.

Question

Quizplus · Accepted Answer

Value added is the difference between a company's sales and the cost of the intermediate goods used to create those products. In other words, it's the value that a company adds to the production process through its use of capital and labor. Option A is incorrect because it only considers the sales, not taking into account the cost of intermediate goods. Option C is incorrect because it only considers the cost of intermediate goods. Option D is incorrect because it only considers the payments to labor and capital, which do not necessarily reflect the value added to the production process.

Value Added Is Equal to the Value of a Company's