GDP increased from $16.55 trillion to $17.28 trillion. What was the growth rate of GDP? The...

GDP increased from $16.55 trillion to $17.28 trillion. What was the growth rate of GDP?

The farmer produces 105 pounds of oranges at a total cost of $1.13 per pound. He sells all of the oranges to firm F for $1.66 per pound. Firm F produces 60 gallons of orange juice at a total cost of $3.60 per gallon (including the amount paid to the farmer for the oranges). Firm F sells 55 gallons of juice to consumers for $5.11 per gallon. There are no other firms in this simple economy. What is the value added by firm F?

Expert Solution

Gross Domestic Product(GDP) is the market value of all final goods and services produced within the domestic territory of an economy during an accounting year.Growth of GDP depicts the welfare of a nation,standard of living and the progress in the economy.

Value addition refers to the difference between the total revenue generated by selling a unit of good/service and the total cost incurred in producing the same.Here the cost includes the cost of raw materials,labour and other expenses.Here it has been asked to find the value added by firm F.Here the firm had produced 60 gallons of juice but it has sold only 55 gallons.So we have the revenue of only 55 gallons and hence we calculate the total value added on 55 gallons of juices only.

Rahul Sunny answered 2 hours ago

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