If the value added of a firm is positive, will the firm necessarily have positive profits?
What will be an ideal response?
No. Value added equals the price of the firm's product minus the cost of intermediate goods. The intermediate goods are converted to the firm's profits by the application of such resources as labor, capital, and entrepreneurship. Profit is the difference between the total sales revenue and the opportunity cost of all the resources used to make the product.
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A _____________ person would rather have a definite lower income than take a risk which entails the same expected value
Fill in the blank(s) with the appropriate word(s).
The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________
A) perfectly elastic; perfectly inelastic B) not perfectly elastic; perfectly elastic C) not perfectly inelastic; inelastic D) elastic; unit elastic