Question

In: Economics

1. Wheat farmer sold all his production of wheat to flourmills for $10,000. The flourmills made...

1. Wheat farmer sold all his production of wheat to flourmills for $10,000. The flourmills made wheat flour and sold it to National Bakery for $12,000. The National bakery used the flour to bake bread and sold the entire bread to submarkets for $15,000. The Supermarkets sold all he bread to public (nationwide) for $16,000. (2.5 marks) a. What is the value added for the Farmer? b. What is the value added for the flourmill? c. What is the value added for the Bakery? d. What is the value added for the supermarket? e. Which amount will be calculated in GDP and why?

Solutions

Expert Solution

Value added for farmer = $10000

value added =

value of output - intermediate cons

value of output = sales + change in stock

total sales by farmer = 10000

thus,value added = 10000

b) value added for the flourmill

Flourmill purchased wheat from farmer will be treated as intermediate consumption

sales = 12000

value of output = sales + change in stock

value of output = 12000

value added = 12000 - 10000

value added = 2000

c) value added for bakery

value of output = sales + change in stock

value of output = 15000

intermediate cons = 12000

value added = 15000 - 12000

value added = 3000

d) value added for supermarket

Sales = 16000

intermediate cons = 15000

value added = 16000 - 15000

value added = 1000

e) GVA at market price ( gross value added at MP ) or GDPmp will be calculated.

Reason : by calculating market value of all final goods and services produced within the domestic territory of a country in a year we will get GDPmp.

value added or product method provides GDP at production phase of economy.

By adding value added for all 4 firms given above we will get GDPmp or GVAmp

GVAmp = value added for farmer + value added for flourmill + value added for bakery + value added for supermkt

GVAmp = 10000 + 2000 + 3000 + 1000

GVAmp = 16000

​​

  

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

). A farmer knows from experience that his wheat harvest  Q (in                              bushel
). A farmer knows from experience that his wheat harvest  Q (in                              bushels) has the probability distribution given by:                                          Q = 150  with probability  0.30 ,                                               = 170    with probability  0.45,                                                =200    with probability  0.25;                       note that the probabilities add up to 1 as they are required by a probability                          distribution. Suppose the demand function he faces in the market place is given by:                                               p  =  320  -  0.5  Q                        where  p =  price in dollars per bushel. Let  R  = total revenue = p x Q. [Note: You may find it                       convenient to first derive...
A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel. His...
A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel. His five hectares of land show diminishing returns, because some are better suited for wheat production than others. The first hectare can produce 1000 bushels of wheat, the second hectare 900, the third 800, and so on. Fill in the table given below to answer the following questions. How many bushels will each of the farmer’s five hectares produce? How much revenue will each hectare...
a) Say a wheat farmer from the Midwest wants to increase his total revenue. In this...
a) Say a wheat farmer from the Midwest wants to increase his total revenue. In this perfectly competitive market where there are many farmers selling wheat, the going price for wheat is $10 a bushel. Do you think this farmer can increase his total revenue by raising the price he charges for wheat? Why or why not? b) If that farmer lived in a community where he was the only supplier of wheat and if wheat was the primary food...
A farmer knows from experience that his wheat harvest  Q (in                             bushels) has th
A farmer knows from experience that his wheat harvest  Q (in                             bushels) has the probability distribution given by:                                          Q = 150  with probability  0.30 ,                                               = 170    with probability  0.45,                                                =200    with probability  0.25;                       note that the probabilities add up to 1 as they are required by a probability                          distribution. Suppose the demand function he faces in the market place is given by:                                               p  =  320  -  0.5  Q                        where  p =  price in dollars per bushel. Let  R  = total revenue = p x Q. [Note: You may find it                       convenient to first derive the...
A farmer made a contract to sell and deliver 10,000 loads of soybeans. A flood destroyed...
A farmer made a contract to sell and deliver 10,000 loads of soybeans. A flood destroyed his entire crop. He claimed that he was discharged from his obligation under the contract. Was he correct? No. The contract obligated the farmer to deliver a stated quantity of soybeans. It did not require the delivery of the soybeans that were grown on the farmer’s land. Therefore, the fact that the beans on his land were destroyed did not discharge the contract. The...
1) A cereal farmer has a stock of wheat of 50 tonnes, and plans to sell...
1) A cereal farmer has a stock of wheat of 50 tonnes, and plans to sell them in a year. The spot price is € 100 / t, the 1-year interest rate is 1%, the cost of storing wheat is 0.5% of the value of the inventory, payable at maturity. What do you advise him to do if he wants to hedge against fluctuations in the price of wheat, and the one-year wheat price is € 100.5 / t? What...
A farmer grows a bushel of wheat and sells it to a miller for $1.00. The...
A farmer grows a bushel of wheat and sells it to a miller for $1.00. The miller turns the wheat into flour and then sells the flour to a baker for $3.00. The baker uses the flour to make bread and sells the bread to an engineer for $6.00. The engineer eats the bread. What is the value added by each person? What is GDP?
#2. Farmer Brown sold the mineral rights on his farm to Exxon Corporation in exchange for...
#2. Farmer Brown sold the mineral rights on his farm to Exxon Corporation in exchange for payments of $14,000 per year in perpetuity. Using a discount rate of 6.5 percent, compute the present value of this arrangement #3. Investment X has the following projected cash flows over the next four years: Year Amount 1 $5700 2 $4900 3 $4300 4 $2000 If the opportunity cost for an investment of this level of risk is 9.1%, what is the most that...
(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or...
(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or 125 bushels of barley on a hectare of her land for the same cost. The price of wheat is $2 per bushel and the price of barley is $0.80 per kilogram. Show the benefits to Sherry of specialization. What should she specialize in? Why ? (2) (b) You work at your school, making $15 per hour. Yesterday, you decided to cancel your two- hour...
(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or...
(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or 125 bushels of barley on a hectare of her land for the same cost. The price of wheat is $2 per bushel and the price of barley is $0.80 per kilogram. Show the benefits to Sherry of specialization. What should she specialize in? Why ? (2) (b) You work as a teacher at your school, making $15 per hour. Yesterday, you decided to cancel...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT