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Home- S x MyEconLab Homework × @ Do Homework Shamee × nts We Fall Down Donn · The Following Table lllust KC Secure https://www.mathxl.com/Student/PlayerHomework aspx2homeworkld-494893723&questionld-1&flushed-false&cld-5133876&back-DoAssignmen ECO-202-T1275 Macroeconomics 18EW1 Shameeca Holmes Homework: 2-2 MyEconLab: Module Two Homework Score: 0 of 2 pts 2 of 10 (1 complete) HW S Concept: Value Added 2 The following table illustrates the value added approach to calculating GDP. Please complete the table Value Added Equals Value Added By: The cotton farmer The textile mill Firm Value of Product 2 Cotton farmer Raw Cotton $3 Textile mill Cotton woven into cotton fabric $5 Shirt company Fabric made into a shirt $17 L.L.Bean The shirt company 12 Shirt sold on L.L.Bean's website $37 LL.Bean Total Value Added

Explanation / Answer

Value added is calculated as follows -

Value added = Value of product - Intermediate consumption

Cotton farmer has produced raw cotton of $3. He has not used any raw material. So, there is no intermediate consumption.

Thus,

Value added by cotton farmer = Value of product - Intermediate consumption = $3 - $0 = $3

Textile mill has produced cotton fabric of $5. Mill has purchased the raw cotton for $3.

Thus,

Value added by textile mill = Value of product - Intermediate consumption = $5 - $3 = $2

Shirt company has produced shirt for $17. It has purchased the cotton fabric for $5.

Thus,

Value added by shirt company = Value of product - Intermediate consumption = $17 - $5 = $12

L.L. Bean Company is selling the shirt for $37 on its website. It has purchased the shirt for $17.

Thus,

Value added by L.L. Bean = Value of product - Intermediate consumption = $37 - $17 = $20

Following is the complete table -

Value added by Value added equals The cotton farmer 3 The textile mill 2 The shirt company 12 L.L. Bean 20 Total value added 37

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