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.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 6, Problem 1P

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Economics Grade 3 CONDUCT RESEARCH ON (the various) MARKET STRUCTURES Research Project/May Explain the concept market structure and explain why there are perfect and imperfect market structures. (5) • Provide reasons as to why the taxi industry is regarded as operating in a monopolistic competitive structure. (10) • How do monopolies impact consumers and the economy. (10) • Use graph(s) to explain the long run equilibrium price and output in a perfect market. (10) • Evaluate the effectiveness of South Africa's competition policy in curbing anticompetitive tendencies in the market. Make use of practical examples. (10) GRAND TOTAL:50 Please turn Copyright

UGD KCQ 2: Microeconomic Essentials (page 11 of 20) - Google Chrome mancosaconnect.ac.za/mod/quiz/attempt.php?attempt=1958913&cmid=436375&page=10 MANCOSA Microeconomic Essentials Jan25 Y1 S1 Back Refer to the diagram below to answer the question that follows: Price PH P1 D₁ ㅁ X Quiz navigation 3 4 5 6 Time left 0:58:34 1 2 Question 11 7 8 Not yet answered Marked out of 1.00 13 33 14 S₁ Flag question Q Q1 Quantity Which of the following may result in a shift of the supply curve from S to S1? OA. An increase in price of the good. B. An increase in wages. O C. A decrease in price of the good. O D. An improvement in the technique of production. https://mancosaconnect.ac.za/mod/quiz/attempt.php?attempt=1958913&cmid=436375&page=10#question-2064270-11 19 20 6 10 10 11 12 15 Question 11- Not yet answered Finish attempt... 7:31 PM

Euros per U.S. Doler Consider the model below, showing the supply and demand curves for the exchange market of U.S. Dollars and Euros. If the inflation rate in the U.S. increases (and in the European Union stays the same), how will that change the original equilibrium shown in the graph? 1.10- 1.00- 0.90 0.80- 0.70 0.60 0.50- 0.40- 0.30 0.20 E 4.7 48 49 50 51 52 53 54 55 56 Quantity of U.S. Dollars traded for Euros (trillionsday) O It will decrease the demand for Dollars and increase the supply, so the exchange rate decreases and the impact on the quantity traded is unknown. O It will decrease the demand for Dollars and increase the supply, so the exchange rate decreases, and the quantity traded increases. It will increase the demand for Dollars and decrease the supply, so the exchange rate decreases, and the quantity traded increases. It will increase the demand for Dollars and decrease the supply, so the exchange rate increases and the impact on the quantity traded is unknown

Answer 2

Question

Chapter 6, Problem 1P

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 6, Problem 1P

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1P

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

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1P

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 1P

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 1P

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