The table below shows the price of inputs and the price of outputs at each step in the production process of making a shirt. Assume that each of these steps takes place within the country. Cotton farmer Fabric naker Inputs Value of output $0 $1. 10 $1. 10 $3. 50 Seving and printing $3. 50 $18. 00 Instructions: Round your answers to the nearest cent. a. Using the standard expenditure method, the total contribution of this shirt to GDP is $[ 4.6 b. If we use the value-added method (i.e., summing the value added by producers at each step of the production process, which equals the price of inputs minus the price of outputs), the contribution of this shirt to GDP is $ c. If we mistakenly add the price of both intermediate goods and final outputs without adjusting for the value added, we would find that this shirt contributes $ to GDP.

The table below shows the price of inputs and the price of outputs at each step in the production process of making a shirt. Assume that each of these steps takes place within the country. Cotton farmer Fabric naker Inputs Value of output $0 $1. 10 $1. 10 $3. 50 Seving and printing $3. 50 $18. 00 Instructions: Round your answers to the nearest cent. a. Using the standard expenditure method, the total contribution of this shirt to GDP is $[ 4.6 b. If we use the value-added method (i.e., summing the value added by producers at each step of the production process, which equals the price of inputs minus the price of outputs), the contribution of this shirt to GDP is $ c. If we mistakenly add the price of both intermediate goods and final outputs without adjusting for the value added, we would find that this shirt contributes $ to GDP.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter18: Pricing The Factors Of Production

Section: Chapter Questions

Problem 4TY

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