A Georgia industry has gross output of $100 million and intermediate inputs of $60 million. What is its value added?
Note
Value added equals gross output minus intermediate inputs. In this example, $100 million minus $60 million gives $40 million of value added.
Subtracting intermediate inputs prevents their value from being counted again as new production at this stage. The $40 million is the industry's contribution in this example, not its total sales revenue or its tax bill.