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A company's wages and salaries are part of its value added. Suppose, however, that the cleaning and machinery maintenance that its own employees used to
A company's wages and salaries are part of its value added. Suppose, however, that the cleaning and machinery maintenance that its own employees used to do are now contracted out to specialist firms who come in to do the same work more cheaply. a. What happens to the company's value added when it "contracts out" such work? The company's value added will O A. decrease, since the company will receive bad reports from fired employees. CB. decrease, since the cleaning and machinery maintenance now become intermediate services purchased from other firms. O C. not change, since now these services are included in value added of specialist firms. O D. increase, since the company doesn't have to pay salary to its own employees who used to do this job. O E. increase, since the company is saving money by losing employees and spending that money on new clients. OF. not change, since the money that the company saves from firing employees is almost equal to what it pays to specialist firms. b. What happens to value added in the economy as a whole? Value added in the economy as a whole will O A. increase, since more firms are now involved in production process. O B. increase, since all the firms increase their values added. O C. decrease, since specialist firms produce the same work more cheaply. O D. not change, since these services are now included in value added of specialist firms. O E. decrease, since there will be less work for the specialist firms to do. O F. not change, since the company will even out its value in the long term
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