A business buys $5,000 worth of inputs from other ﬁrms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the
Business to these products is
A) $5,000.
B) $6,500.
C) $1,500.
D) $1,000.

Question

Quizplus · Accepted Answer

The value added by the business is equal to the total revenue generated minus the cost of inputs purchased from other firms. 
Total revenue = 100 units x $65 = $6,500 
Cost of inputs = $5,000 
Value added = $6,500 - $5,000 = $1,500.

A Business Buys $5,000 Worth of Inputs from Other ﬁRms