Explanation a. GDP as the Value added in production. The value addition can be calculated by the value of input from the value of output, in the given case the value addition can be calculated by summing up the value addition to the pizza company, bread company and the cheese company. Formula to calculate value addition: Value addition to bread company is $50 Value addition to cheese company is $35 Value addition to pizza company is $115 Substitute $50 for value addition to bread company, $35 for value addition to cheese company, and $115 for value addition to pizza company. Therefore, GDP by value addition will be $200. Conclusion: Thus, GDP by value addition will be $200. b. GDP as spending on final goods and services. For the calculation of spending on final goods and services, only the output of pizza company is to be calculated because the output produced by other two companies will be the input for pizza company...

4th Edition

ISBN: 9781464143847

Author: Paul Krugman, Robin Wells

Publisher: Worth Publishers

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Question

Chapter 22, Problem 4P

To determine

To determine: The GDP as the value added production, as spending on final goods and services and as factor income.

Concept Introduction:

Gross Domestic Product (GDP): It refers to the gross money value or gross market value of all the finished goods and services produced by resident and non-resident people of the country that is within the borders of that particular country in an accounting year.

Expert Solution & Answer

Chapter 22 Solutions

Economics

Ch. 22 - Prob. 1BCQ Ch. 22 - Prob. 2BCQ Ch. 22 - Prob. 3BCQ Ch. 22 - Prob. 1P Ch. 22 - Prob. 2P Ch. 22 - Prob. 3P Ch. 22 - Prob. 4P Ch. 22 - Prob. 5P Ch. 22 - Prob. 6P Ch. 22 - Prob. 7P

Ch. 22 - Prob. 8P Ch. 22 - Prob. 9P Ch. 22 - Prob. 10P Ch. 22 - Prob. 11P Ch. 22 - Prob. 12P Ch. 22 - Prob. 13P Ch. 22 - Prob. 14P

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