Table 6-6 shows the different stages in the production of an office building. A mining firm extracts iron from the earth. A steel mill converts the iron to steel beams for use in construction. A construction company uses the steel beams to make a building. Assume that the total product of these firms represents the only components of the building and that they will have no other uses.
Table 6-6

-Refer to Table 6-6. What is the value added by Fuller Mill?
A) $325,000
B) $225,000
C) $125,000
D) $100,000

Question

Table 6-6 shows the different stages in the production of an office building. A mining firm extracts iron from the earth. A steel mill converts the iron to steel beams for use in construction. A construction company uses the steel beams to make a building. Assume that the total product of these firms represents the only components of the building and that they will have no other uses.
Table 6-6
 
-Refer to Table 6-6. What is the value added by Fuller Mill?
A) $325,000 
B) $225,000 
C) $125,000 
D) $100,000

Quizplus · Accepted Answer

The value added by Fuller Mill is calculated as the difference between the value of its output and the value of the intermediate goods it uses. If the output is $325,000 and the intermediate goods cost $200,000, the value added is $125,000.

Table 6-6 Shows the Different Stages in the Production of an Office