ABC Computer Company has a $20 million factory in Silicon Valley in which in builds computer components. During the current year, ABC's costs are labor (wages) of $1.1 million; interest on debt of $0.2 million; and taxes of $0.1 million. ABC sells all its output to XYZ Supercomputer for $2.0 million. Using ABC's components, XYZ builds four supercomputers at a cost of $0.800 million each, which comes from $0.500 million worth of components, $0. million in labor costs, and $0.1 million in taxes per computer. XYZ has a $30 million factory. XYZ sells three of the supercomputers to other businesses for $1.0 million each. At year's end, it had not sold the fourth. The unsold computer is carried on XYZ's books as a $0.800 million increase in inventory. According to the product approach, the total GDP contribution of these companies is $ 3.8 million. According to the expenditure approach, since the three supercomputers are sold to businesses, XYZ's sales are counted as investment computer is counted as inventory investment Thus the total contribution to GDP, using the expenditure approach, is $ 3.8 million. According to the income approach, the contributions of these companies would be counted as follows: Wages to ABC employees = $ 1.1 million. Wages to XYZ employees = $0.8 million Profit of ABC = $ 0.6 million. Profit of XYZ - $ 0.6 million. Taxes paid by ABC = $ Taxes paid by XYZ = S million. million. The unsold
ABC Computer Company has a $20 million factory in Silicon Valley in which in builds computer components. During the current year, ABC's costs are labor (wages) of $1.1 million; interest on debt of $0.2 million; and taxes of $0.1 million. ABC sells all its output to XYZ Supercomputer for $2.0 million. Using ABC's components, XYZ builds four supercomputers at a cost of $0.800 million each, which comes from $0.500 million worth of components, $0. million in labor costs, and $0.1 million in taxes per computer. XYZ has a $30 million factory. XYZ sells three of the supercomputers to other businesses for $1.0 million each. At year's end, it had not sold the fourth. The unsold computer is carried on XYZ's books as a $0.800 million increase in inventory. According to the product approach, the total GDP contribution of these companies is $ 3.8 million. According to the expenditure approach, since the three supercomputers are sold to businesses, XYZ's sales are counted as investment computer is counted as inventory investment Thus the total contribution to GDP, using the expenditure approach, is $ 3.8 million. According to the income approach, the contributions of these companies would be counted as follows: Wages to ABC employees = $ 1.1 million. Wages to XYZ employees = $0.8 million Profit of ABC = $ 0.6 million. Profit of XYZ - $ 0.6 million. Taxes paid by ABC = $ Taxes paid by XYZ = S million. million. The unsold
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:ABC Computer Company has a $20 million factory in Silicon Valley in which in builds computer components. During the current year, ABC's costs are
labor (wages) of $1.1 million; interest on debt of $0.2 million; and taxes of $0.1 million.
ABC sells all its output to XYZ Supercomputer for $2.0 million.
Using ABC's components, XYZ builds four supercomputers at a cost of $0.800 million each, which comes from $0.500 million worth of components, $0.2
million in labor costs, and $0.1 million in taxes per computer. XYZ has a $30 million factory. XYZ sells three of the supercomputers to other businesses
for $1.0 million each. At year's end, it had not sold the fourth. The unsold computer is carried on XYZ's books as a $0.800 million increase in inventory.
According to the product approach, the total GDP contribution of these companies is $ 3.8 million.
According to the expenditure approach, since the three supercomputers are sold to businesses, XYZ's sales are counted as investment
computer is counted as inventory investment
Thus the total contribution to GDP, using the expenditure approach, is $ 3.8 million.
According to the income approach, the contributions of these companies would be counted as follows:
Wages to ABC employees = $ 1.1 million.
Wages to XYZ employees = $0.8 million.
Profit of ABC = $ 0.6 million.
Profit of XYZ = $ 0.6 million.
Taxes paid by ABC = $
Taxes paid by XYZ = S
million.
million.
The unsold
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education