Assume That a Firm Buys All the Parts That It

question 17

Multiple Choice

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is:

• A) $10,000.
• B) $12,000.
• C) $20,000.
• D) $22,000.

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Definitions:

Executive

A high-ranking person in a company or other institution, typically responsible for making large corporate decisions.

Finance Department

A division within an organization responsible for managing financial actions including budgeting and investment strategies.

CFO

Chief Financial Officer, a senior executive responsible for managing the financial actions of a company.

Collateralized

The provision of an asset or property as security for the repayment of a loan, reducing the risk for the lender.