A baker bought flour and other ingredients for $250.00, spent $52.00 on distribution, sold the bread for $320.00. the value added by the baker is?
Answer Details
The value added by the baker is $18.00.
To understand this, we need to know what value added means. Value added is the difference between the total revenue generated from the sale of a product and the total cost of all the inputs used to produce that product.
In this case, the baker spent $250.00 on flour and other ingredients and $52.00 on distribution, for a total cost of $302.00. The baker then sold the bread for $320.00.
To calculate the value added, we subtract the total cost from the total revenue:
Value added = Total revenue - Total cost
Value added = $320.00 - $302.00
Value added = $18.00
Therefore, the value added by the baker is $18.00. This represents the contribution the baker made to the economy by using their skills and resources to transform raw materials into a finished product that consumers were willing to pay for.