The amount of value a firm creates is measured by the difference betwe

QUESTION

The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.

Indicate whether the statement is true or false.

ANSWER

TRUE
The way to increase the profitability of a firm is to create more value. The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. In general, the more value customers place on a firm’s products, the higher the price the firm can charge for those products.