Consider a simple production process for a wooden chair. A lumberjack sells raw wood to a sawmill for $40. The sawmill cuts the wood into lumber and sells it to a furniture maker for $90. The furniture maker builds a chair and sells it to a retail store for $150. Finally, the retail store sells the chair to a consumer for $200. Using the value-added approach, what is the total contribution of this chair to the economy's output?

Analyzing a Production Chain

Calculating Value Added in a Production Chain

Consider a simple production process: A farmer sells wheat to a miller for $10. The miller processes the wheat into flour and sells it to a baker for $25. The baker uses the flour to make a loaf of bread, which is sold to a consumer for $40. Based on this information, the total contribution to the economy's output is correctly calculated by summing the value of all transactions ($10 + $25 + $40 = $75).