added value

• What is added value in the context of production?

  It is the value a business adds to raw materials during the production process.
• How is added value calculated?

  It is the difference between the cost of purchasing raw materials and the selling price of the finished good.
• If a carpenter spends £24 on materials and sells the table for £104, what is the added value?

  The added value is £80 ($£104 - £24 =$$£80$).
• Why should added value not be confused with profit?

  Because added value does not account for expenses like wages and overheads that must be deducted from it.
• Does added value apply only to goods? Why or why not?

  No, it also applies to services.
• How does a wholesaler add value when selling baked beans?

  By providing a service that makes it convenient for retailers to purchase the beans.
• What are some ways to increase added value for goods and services?

  • Purchasing cheaper raw materials without compromising quality
  • Improving efficiency through updated machinery or workforce training
  • Raising product prices while considering price elasticity of demand
  • Achieving brand status to command higher prices
  • Offering additional services with products
  • Improving customer access or convenience
• What are the costs of raw materials used by the carpenter in the example?

  Wood - £20, Brackets - £2, Screws - £0.50, Paint - £1, Varnish - £0.50, totaling £24.
• What is the significance of price elasticity of demand when raising product prices?

  If the product is price sensitive, raising the price may lead to a decrease in overall revenue.
• How does achieving brand status contribute to added value?

  It allows products to be sold at higher prices despite similar production processes.
• What are examples of additional services that can add value to a product?

  A telephone helpline for technical questions or installation services for new equipment.
• What are some examples of improving customer access or convenience to add value?

  Drive-through fast-food outlets and home-delivery pizza services.
• What are the discussion themes related to added value?

  • How is value added different from profit?
  • How is value added calculated?
  • How does a business add value to its goods and services?