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Revenue$1,000CostsWages and salaries$700Rent on land$50Rental fee for tractor$100Seed, fertilizer$100Pesticides, irrigation$50Calculate the value added by this farm.

Question

Revenue1,000CostsWagesandsalaries1,000CostsWages and salaries700Rent on land50Rentalfeefortractor50Rental fee for tractor100Seed, fertilizer100Pesticides,irrigation100Pesticides, irrigation50Calculate the value added by this farm.

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Solution

The value added by a farm or any business is calculated as the difference between the total revenue and the cost of raw materials and services. In this case, the costs of raw materials and services are the costs of seed, fertilizer, pesticides, and irrigation.

Here's how to calculate it:

  1. First, add up the costs of raw materials and services. In this case, it's 100(forseedandfertilizer)+100 (for seed and fertilizer) + 50 (for pesticides and irrigation) = $150.

  2. Then, subtract this total from the total revenue. In this case, it's 1,000(totalrevenue)1,000 (total revenue) - 150 (cost of raw materials and services) = $850.

So, the value added by this farm is $850.

This problem has been solved

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