Firm a Produces Something That Firm B Uses as an

question 187

Multiple Choice

$$\begin{array} { | c | c | } \hline \text { Stage of Production } & \text { Sales Value of Materials or Products } \\\hline \text { Firm } A & \$ 800 \\\hline \text { Firm } B & 1,250 \\\hline \text { Firm } C & 1,850 \\\hline \text { Firm } D & 2,600 \\\hline \text { Firm } E & 3,800 \\\hline\end{array}$$ Firm A produces something that Firm B uses as an input. The product of Firm B, in turn, is purchased and used as an input by Firm C, and so on down the line through Firm E, which produces the ?nal
Product. (See the accompanying table.) The total value added by Firms A-E from the production of
The ?nal product described here is

• A) $3,000.
• B) $3,800.
• C) $6,500.
• D) $10,300.

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Definitions:

Domestic Production

The total value of all goods and services produced within a country's borders in a given time period.

Production Costs

The expenses incurred in the process of creating goods or services, including labor, materials, and overheads.

Equilibrium Price

The rate at which the quantity of goods on offer is equal to the quantity of goods consumers are willing to buy.

Domestic Price

The cost of goods, services, or commodities within a country's borders, unaffected by international tariffs or duties.