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What was the value added by Carlo's Bakery?

What was the value added by Carlo's Bakery?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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25. Did you know that Peanut butter cookies can be made with just 3 ingredients: sugar, eggs, and peanut butter? Suppose that the Superior Nut Company imports peanuts for $3,000,000 and crushes them into peanut butter that it sells to Carlo's Bakery for $5,000,000. Carlo's Bakery imports eggs and sugar for $4,000,000 and uses the ingredients to make peanut butter cookies which it sells for $15,000,000. If you use the expenditure on final goods method to calculating GDP then the contribution to GDP here is (expenditure on final goods) – (expenditure on imports) = $8,000,000. If you use the value added method you calculate the value added by each company and add them together. It should give you the same result. What was the value added by Carlo's Bakery? (yes, it is in the millions and you have to type the Os)
Transcribed Image Text:25. Did you know that Peanut butter cookies can be made with just 3 ingredients: sugar, eggs, and peanut butter? Suppose that the Superior Nut Company imports peanuts for $3,000,000 and crushes them into peanut butter that it sells to Carlo's Bakery for $5,000,000. Carlo's Bakery imports eggs and sugar for $4,000,000 and uses the ingredients to make peanut butter cookies which it sells for $15,000,000. If you use the expenditure on final goods method to calculating GDP then the contribution to GDP here is (expenditure on final goods) – (expenditure on imports) = $8,000,000. If you use the value added method you calculate the value added by each company and add them together. It should give you the same result. What was the value added by Carlo's Bakery? (yes, it is in the millions and you have to type the Os)
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