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JAMB Economics 2003 Question 23

Question 23

National Income

For a firm, value added can be defined as the difference between the

  1. A.input prices and product prices
  2. B.value of its output and inputs purchased from other firms
  3. C.value of its output and the cost of production
  4. D.total revenue and total cost
Show the answer and explanation

Answer: B (value of its output and inputs purchased from other firms)

Explanation

Value added = value of the firm's output − value of the inputs it bought from other firms.