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1 September, 06:14

Intelligence Incorporated produces 200 computer chips and sells them for $200 each to Bell Computers. Using the chips and other labor and materials, Bell produces 200 personal computers. Bell sells the computers, bundled with software that Bell licenses from Macrosoft at $50 per computer, to PC Charlie's for $800 each. PC Charlie's sells the computers to the public for $1,000 each. Calculate the total contribution to GDP using the value-added method.

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  1. 1 September, 08:36
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    Answer: $200,000

    Explanation:

    Intelligence Incorporated:

    Computer chips produces = 200

    Selling price of each = $200

    Total revenue = 200 * $200

    = $40,000

    Cost = $0

    Value added = Total revenue - cost

    = $40,000 - $0

    = $40,000

    Bell Computers:

    Personal computers produces = 200

    Selling price of each = $800

    Total revenue = 200 * $800

    = $160,000

    Total Cost = cost of computer chips + cost of software

    = 200 * $200 + 200 * $50

    = $50,000

    Value added = Total revenue - Total cost

    = $160,000 - $50,000

    = $110,000

    Macrosoft:

    software sold to bell computers

    Selling price of each = $50

    Total revenue = 200 * $50

    = $10,000

    Total Cost = $0

    Value added = Total revenue - Total cost

    = $10,000 - $0

    = $10,000

    PC Charlie:

    Personal computers purchase = 200

    Selling price of each = $1000

    Total revenue = 200 * $1,000

    = $200,000

    Total Cost = cost of computers purchased from bell

    = 200 * $800

    = $160,000

    Value added = Total revenue - Total cost

    = $200,000 - $160,000

    = $40,000

    GDP by the value added method = value added by Intelligence Incorporated + value added by Bell Computers + value added by Macrosoft + value added by PC Charlie

    = $40,000 + $110,000 + $10,000 + $40,000

    = $200,000
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