Question

In: Economics

A technology company produced 20,000 smart phones in 2019, which it sold for $400 each. Of...

A technology company produced 20,000 smart phones in 2019, which it sold for $400 each. Of these 12,000 are sold to consumers, 2000 are sold to businesses, 1000 are sold to the government, and 3000 are sold abroad. All unsold smart phones are added to the company’s inventory at the end of the year.

Use the expenditure method to calculate the value of GDP and it's individual components. Please enter your answers as numeric responses with no decimal places. (ie. 4,000,000 or $4,000,000 not "Four million dollars"). Also because these answers will be large numbers it is a good idea to use commas to separate the zeros in your answer (ie $4,000,000 not $4000000).

Hint: Each of your answers below will be one variable in the equation Y = C + I + G + NX

What is the total contribution to GDP from the above transactions?

What is the value of Consumption Expenditure?

What is the value of Investment Expenditure?

What is the value of Government Expenditure?

What is the Value of Net Exports?

Solutions

Expert Solution

1)8000000 $

(Total contribution to GDP from the given transactions is the value of the 20,000 smartphones produced.

Value of Mobile phones produced in 2019= 20,000* price of mobile phone.

= 20,000*400=8000000 )

2) 4800000 $

( lts the value of the value of mobile phones sold to consumers .

Value of mobile phones sold to consumers= 12000*400=4800000)

3 )1600000 $

( lts the value of mobile phones used by the firm as inventory plus value of mobile phones sold to businesses

Value of mobiles used by the firm as inventory= 2000*400=800000

Value of mobile phones sold to businesses= 2000*400=800000

Business investment expenditure= 800000+800000=1600000)

4) 400000

( lts the value of mobile phones sold to government

Value of mobile phones sold to government= 1000*400=400000)

5) 1200000

( net exports = value of exports - value of imports

Value of exports=3000*400=1200000

Value of imports =0

Net exports= 1200000-0=1200000)

Rahul Sunny answered 2 years ago
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