Final answer:
Value-added refers to the difference between the cost of inputs (like labor and raw materials) and the price customers are willing to pay for a product or service.
Step-by-step explanation:
Value-added refers to C. the difference between the cost of inputs and what customers are willing to pay. This concept is pivotal in understanding how businesses generate profit through their operations. By focusing on value-added activities, firms aim to enhance the value of their product or service so that they can sell it for more than the sum of their input costs, which can include variable costs like labor and raw materials. Variable costs themselves vary with the level of output, as additional labor or materials are typically required to produce more goods or services. Thus, value-added can be seen as the enhancement made, taking into account the variable costs incurred to produce a good or service in contrast to the revenue it generates.