What is the value added at each stage stage 1 stage 2 stage3 stage 4     how much does this output contribute to GDP?   how much would the output contribute to GDP if the lumber were imported from Canada?

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What is the value added at each stage

stage 1

stage 2

stage3

stage 4

 

 

how much does this output contribute to GDP?

 

how much would the output contribute to GDP if the lumber were imported from Canada?

**Title: Understanding the Stages of Furniture Production and GDP Contribution**

Suppose that furniture production encompasses the following stages:

- **Stage 1**: Trees are sold to a lumber company ($1,000).
- **Stage 2**: Lumber is sold to a furniture company ($2,500).
- **Stage 3**: The furniture company sells furniture to a retail store ($6,000).
- **Stage 4**: The furniture store sells furniture to the consumer ($12,000).

**Instructions**: Enter your responses rounded to the nearest whole number.

### Questions:

**a. What is the value added at each stage?**

- **Stage 1**: $ _______
- **Stage 2**: $ _______
- **Stage 3**: $ _______
- **Stage 4**: $ _______

**b. How much does this output contribute to GDP?**

- $ _______

### Explanation of Calculation:

**Value Added**: The value added at each stage is calculated by subtracting the cost of the previous stage from the current stage.

1. **Stage 1**: Since this is the initial stage, the value added is the entire amount: 
   - $1,000
2. **Stage 2**: Subtract the cost of trees (Stage 1) from the cost of lumber (Stage 2):
   - $2,500 - $1,000 = $1,500
3. **Stage 3**: Subtract the cost of lumber (Stage 2) from the cost of furniture sold to the retail store (Stage 3):
   - $6,000 - $2,500 = $3,500
4. **Stage 4**: Subtract the cost of furniture sold to the retail store (Stage 3) from the cost of furniture sold to the consumer (Stage 4):
   - $12,000 - $6,000 = $6,000

**Total Contribution to GDP**: To determine the total contribution to GDP, sum the value added at each stage:

- $1,000 (Stage 1) + $1,500 (Stage 2) + $3,500 (Stage 3) + $6,000 (Stage 4) = $12,000
Transcribed Image Text:**Title: Understanding the Stages of Furniture Production and GDP Contribution** Suppose that furniture production encompasses the following stages: - **Stage 1**: Trees are sold to a lumber company ($1,000). - **Stage 2**: Lumber is sold to a furniture company ($2,500). - **Stage 3**: The furniture company sells furniture to a retail store ($6,000). - **Stage 4**: The furniture store sells furniture to the consumer ($12,000). **Instructions**: Enter your responses rounded to the nearest whole number. ### Questions: **a. What is the value added at each stage?** - **Stage 1**: $ _______ - **Stage 2**: $ _______ - **Stage 3**: $ _______ - **Stage 4**: $ _______ **b. How much does this output contribute to GDP?** - $ _______ ### Explanation of Calculation: **Value Added**: The value added at each stage is calculated by subtracting the cost of the previous stage from the current stage. 1. **Stage 1**: Since this is the initial stage, the value added is the entire amount: - $1,000 2. **Stage 2**: Subtract the cost of trees (Stage 1) from the cost of lumber (Stage 2): - $2,500 - $1,000 = $1,500 3. **Stage 3**: Subtract the cost of lumber (Stage 2) from the cost of furniture sold to the retail store (Stage 3): - $6,000 - $2,500 = $3,500 4. **Stage 4**: Subtract the cost of furniture sold to the retail store (Stage 3) from the cost of furniture sold to the consumer (Stage 4): - $12,000 - $6,000 = $6,000 **Total Contribution to GDP**: To determine the total contribution to GDP, sum the value added at each stage: - $1,000 (Stage 1) + $1,500 (Stage 2) + $3,500 (Stage 3) + $6,000 (Stage 4) = $12,000
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