If a firm hires labor for $20,000,pays rent of $12,000,buys raw materials for $6,000,earns profits of $3,000,and sells its output for $41,000,the firm's value added is

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Quizplus · Accepted Answer

Value added is the difference between the value of the firm's output and the value of its inputs. In this case, the value of the firm's output is $41,000 and the value of its inputs is $20,000 + $12,000 + $6,000 = $38,000. Therefore, the firm's value added is $41,000 - $38,000 = $3,000.

If a Firm Hires Labor for $20,000,pays Rent of $12,000,buys