Asked by Emily Esparza on Apr 25, 2024
Verified
Katrina pays $40 for a meal at a fancy restaurant.The ingredients used cost $10.The value added by the restaurant is _____.
A) $30
B) $40
C) $70
D) $40 plus the wages paid to the chef and waiters
E) $40 plus the profit earned by the restaurant owner
Value Added
At each stage of production, the selling price of a product minus the cost of intermediate goods purchased from other firms.
Fancy Restaurant
A high-end dining establishment known for its quality cuisine, superior service, and often, a refined atmosphere.
Ingredients
The components or elements that are combined to create a product, often used in the context of cooking or manufacturing.
- Understand the concept of value added in the context of GDP.
Verified Answer
DR
Danielle Robinson6 days ago
Final Answer :
A
Explanation :
The value added by the restaurant is equal to the price Katrina paid ($40) minus the cost of the ingredients ($10), which equals $30. Option D and E are not valid as they are not the actual value added by the restaurant, but the components that contribute to the cost of the meal. Option B is incorrect because the cost of the ingredients is already included in the price Katrina paid.
Learning Objectives
- Understand the concept of value added in the context of GDP.