The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given. Concept Introduction: Gross Domestic Product : It is the money value of final goods and services produced in a year.

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Answer 1

Question

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Students have asked these similar questions

At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate). Students with early classes Students without early classes Coffee 70 60 Banana 50 100 The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? HINT: if you sell the bundle, can you make more by offering coffee separately? If so, what price should be charged for the bundle? (Show calculations)

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Use the following demand data: Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40%

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40% ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.

Answer 2

Question

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 3

Question

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 4

Question

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 5

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

Answer 6

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

Answer 7

Chapter 6, Problem 1.1PA

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Answer 8

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90