Question

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

Answer 1

Answer:

$1,500

Explanation:

Value of raw material = $5000.

Producers makes 100 units and sells at $65 per unit

Value for the consumers for this product would be = $65 * 100 units = $6,500

Value added by the producer = Selling price - Cost of raw material

= $6,500 - $5,000

= $1,500

So, the value added by the business to these products is $1,500.