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Social ScienceMNLOGS harvested logs (with no inputs from other companies) from their property in northern Minnesota. They sold these logs to MNLumber for $1,500 and MNLumber cut and planed thelogs into lumber. MNLumber then sold the lumber for $4,000 to MNFurniture. MNFurniture used the lumber to produce 100 tables that they sold to customers for $70 eachInstructions: Enter your responses as whole numbers.a. Complete the table below to calculate the value added by each firm.Cost of purchased inputsValue addedRevenuesCompany$MNLOGS$MNLumber$$$MNFurnitureb. Suppose that all of these transactions took place in 2014. By how much did GDP increase because of these transactions?$c. Suppose that MNLogs harvested the logs in October 2014 and sold them to MNLumber in December 2014. MNLumber then sold the finished lumber to MNFurniture in April 2015 andMNFurniture sold all 100 tables during the rest of 2015. By how much did GDP increase in 2014 and 2015 due to these transactions?GDP increase in 2014: $GDP increase in 2015: $
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MNLOGS harvested logs (with no inputs from other companies) from their property in northern Minnesota. They sold these logs to MNLumber for $1,500 and MNLumber cut and planed the logs into lumber. MNLumber then sold the lumber for $4,000 to MNFurniture. MNFurniture used the lumber to produce 100 tables that they sold to customers for $70 each Instructions: Enter your responses as whole numbers. a. Complete the table below to calculate the value added by each firm. Cost of purchased inputs Value added Revenues Company $ MNLOGS $ MNLumber $ $ $ MNFurniture b. Suppose that all of these transactions took place in 2014. By how much did GDP increase because of these transactions? $ c. Suppose that MNLogs harvested the logs in October 2014 and sold them to MNLumber in December 2014. MNLumber then sold the finished lumber to MNFurniture in April 2015 and MNFurniture sold all 100 tables during the rest of 2015. By how much did GDP increase in 2014 and 2015 due to these transactions? GDP increase in 2014: $ GDP increase in 2015: $
Expert Answer
Given,
MNLogs harvested logs with zero input cost and sold these logs to MNLumber for $1,500. Then MNLumber cut and planned the logs into lumber and sold the lumber to MNFurniture for $4,000.
Lumber used by MNFurniture to produce tables.
Quantity of tables: 100 units
Price of table: $70 per unit.
Revenue generated by MNFurniture is the multiplication of quantity of tables and price of each table he sold. That is,
Revenue = price × quantity
= $70 × 100 = $7,000.
The value added is that extra income/investment a company adds to its goods and services before offering them to the customers.
With the help of following table, the value added of each firm can be calculated:
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Revenue (S) Cost of Company Value added purchased input (S) (S) 0 MNLogs MNLumber 1,500 4,000 7,000 1,500 2,500 3,000 1,500 4,000 MNFurniture
b.) According to the value-added approach GDP is equal to the value of all goods and services produced in an economy minus the value of all purchased intermediate goods for producti...
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