When something is manufactured, a sum of money is spent on it, usually for the raw materials. That is the production cost. The enhancements a company adds to it’s products before offering it to the final consumer adds value to it and because of these enhancements the company or firm can sell the product at a higher value. This value is called the added value. In other words it is the difference between the sale price and production cost.
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The Purpose Of Business Activity
Basically, as humans we all have needs and wants. Needs are the things we can’t live without while desires are things we can live without. We as humans have unlimited wants. Business activity exists to satisfy these needs and wants.