EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 8PA
Sub part (a):
To determine
The
Sub part (b):
To determine
Value addition.
Sub part (c):
To determine
Total Value Added.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A farmer grows wheat, which she sells to a miller for $100. The miller turns the wheat into flour, which she
sells to a baker for $150. The baker turns the wheat into bread, which she sells to consumers for $180. Consumers
eat the bread.
a. What is GDP in this economy? Explain.
b. Value added is defined as the value of a producer’s output minus the value of the intermediate goods that the producer buys to make the output. Assuming there are no intermediate goods beyond those described above, calculate the value added of each of
the three producers.
c. What is total value added of the three producers in this economy? How does it compare to the economy’s GDP? Does this example suggest another way of calculating GDP?
A farmer produces milk, which he sells to a mill for 1000 tk. The mill turns the milk into cream, which he sells to a baker for 1500 tk. The baker turns the cream into a cake, which he sells to consumers for 2000 tk. Consumers eat the cake.a. What is GDP in this economy? Explain.b. What is the total value added of the three producers in this economy? Does this example suggest another way of calculating GDP?
What is the change in GDP according to the *****income**** approach? How do the inputs that make up Net Domestic Income (wages, interest, and profits) change?
I noticed that using the expenditure approach the GDP DECREASED by 800 dollars. My income approach is not working out.
Chapter 15 Solutions
EBK ESSENTIALS OF ECONOMICS
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QR
Ch. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1QCMCCh. 15 - Prob. 2QCMCCh. 15 - Prob. 3QCMCCh. 15 - Prob. 4QCMCCh. 15 - Prob. 5QCMCCh. 15 - Prob. 6QCMCCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PA
Knowledge Booster
Similar questions
- Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?arrow_forwardWhich of the following are counted in this year’s GDP? Explain your answer in each case. A. Flashy Car Company sold a used car. B. Juanita Jones cooked meals for her family. C. IBM paid interest on its bonds. D. José Suarez purchased 100 shares of Microsoft stock. E. Bob Smith received a welfare payment. F. Carriage Realty earned a brokerage commission for selling a previously owned house. G. The government makes interest payments to persons holding government bonds. H. Air and water pollution increase. I. Gambling is legalized in all states. J. A retired worker receives a Social Security payment.arrow_forwardIn 2020, Delorse Greenlee purchased a 1892 painting by Paul Cezanne for $250 million. She also paid a 1 percent commission to the auction house that sold the painting. What was the contribution of these transactions to GDP in the year 2020? Select one: a. $2.5 million b. $252.5 million C. $25 million d. $0arrow_forward
- Which of the following are included in this year’s GDP? Explain your answer in each case.a. Interest on an AT&T corporate bond.b. Social Security payments received by a retired factory worker.c. The unpaid services of a family member in painting the family home.d. The income of a dentist.e. The money received by Smith when she sells her economics textbook to a book buyer.f. The monthly allowance a college student receives from home.g. Rent received on a two-bedroom apartment.h. The money received by Josh when he resells his current year- model Honda automobile to Kim.i. The publication of a college textbook.j. A 2-hour decrease in the length of the workweek.k. The purchase of an AT&T corporate bond.l. A $2 billion increase in business inventories.m. The purchase of 100 shares of GM common stock.n. The purchase of an insurance policy.arrow_forwardLast year, a small nation with abundant forests cut down $200 worth of trees. It then turned $100 worth of trees into $150 worth of lumber. It used $100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nation's GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?arrow_forwardA farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into flour and then sells it to a Baker for $25.00. The Baker uses the flour to bake bread and sells the bread to a Musician for $40.00. The Musician eats the bread. The Musician, also grows pumpkins in his backyard garden to feed his family. a) what is the GDP? b) what is the value added by each person ? c) should pumpkins be included in the GDP?arrow_forward
- what's the answerarrow_forwardOnly answer question d and e pleasearrow_forwardSuppose that a farmer grows wheat, which she sells to a miller for $10. The miller turns the wheat into flour, which she sells to a baker for $55. The baker turns the wheat into bread, which she sells to consumers for $140. Consumers eat the bread. What is GDP in this economy? Consider the following table showing the breakdown of GDP (in billions) for China. GDP Category Amount (in billions) Consumption 1700 Investment 700 Government Expenditure 100 Exports 50 Imports 40arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning