Value-added refers to:
A) the cost of inputs.
B) the price of outputs.
C) the difference between cost of inputs and what customers are willing to pay.
D) the extra profit obtained from increased productivity.
E) all of the choices are correct.

Question

Quizplus · Accepted Answer

Value-added refers to the difference between the cost of inputs and what customers are willing to pay. It is the value that a company adds to a product or service through its production process, marketing, and distribution. This is what contributes to the overall profitability of the company. Option A is incorrect because the cost of inputs alone does not reflect the value that a company adds to a product. Option B is also incorrect as the price of outputs does not necessarily reflect the value added. Option D is not a comprehensive definition of value added as it only highlights the profitability aspect. Option E is incorrect as not all the choices provided are correct.

Value-Added Refers To