Question

The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1,000 in taxes, and has profits of $3,000.

What is its value added?

a.$3,000

b.$59,000

c.$19,000

d.$39,000

Answer 1

d.$39,000

Step-by-step explanation:

Data provided as per the question is given below

Pay to workers = $35,000

Pay in taxes = $1,000

Profits = $3,000

The calculation of value added is shown below:-

Value added = Pay to workers + Pay in taxes + Profits

= $35,000 + $1,000 + $3,000

= $39,000

Therefore we are not considering $20,000 because it spent on intermediate goods.