If a firm hires labor for $8,000,pays rent of $4,000,buys raw materials for $13,000,earns profits of $1,200,and sells its output for $31,000,the firm's value added is

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Quizplus · Accepted Answer

Value added is calculated by subtracting the cost of inputs (labor, rent, raw materials) from the sales revenue. Therefore, value added = $31,000 - ($8,000 + $4,000 + $13,000) = $6,000 + $1,200 = $7,200. So, the closest option is C, $18,000.

If a Firm Hires Labor for $8,000,pays Rent of $4,000,buys