Final answer:
Value-added refers to the increase in value created through the production process, not the cost of inputs. It represents the added value from transforming inputs into consumer-ready outputs.
Step-by-step explanation:
Value-added does not refer to the cost of the inputs required to produce goods and services; rather, it refers to the increase in value that is added to these inputs through the production process. Inputs are the resources such as labor, materials, and machinery that are used in the production of goods and services, also known as factors of production. The production function is the process by which a firm transforms these economic inputs into outputs like goods and services that consumers use. Value-added is the difference between the output value and the cost of input factors.