1NO value: 1.00 points Suppose that furniture production encompasses the followi

Question

1NO value: 1.00 points Suppose that furniture production encompasses the following stages: Stage 1: Trees are sold to lumber company Stage 2 Lumber is sold to furniture company Stage 3: Furniture company selis furniture to retail store Stage 4: Furniture store sells furniture to consumer $1,100 $1,900 $3,500 $6,750 Instructions: Enter your responses rounded to the nearest whole number (a) What is the value added at each stage? Stage 1: s Stage 2 S Stage 3 s Stage 4 S (b) How much does this output contibute to GDP? (c) How much would the output contibute to GDP if the lumber were imported from Canada?

Explanation / Answer

(a) Value added at each stage

Stage 1: $1,100

Stage 2: $1,900 - $1,100 = $800

Stage 3: $3,500 - $1,900 = $1,600

Stage 4: $6,750 - $3,500 = $3,250

(b) Contribution to GDP

Sum of Value Added = Contribution to GDP

=> Contribution to GDP = 1,100 + 800 +1,600 + 3,250 = $6,750

(c) Contribution to GDP when lumber is imported

When lumber is imported, the value added of trees getting sold is now no more a contribution to GDP.

=> Contribution to GDP = 1,900 + (3,500 - 1,900) + (6,750 - 3500)

Contribution to GDP = 1,900 + 1,600 + 3,250 = $6,750

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