File firm Narratives Consider the information in the files named Four Firms Narr

Question

File firm Narratives

Consider the information in the files named Four Firms Narrative in the Homework 1 folder (in the files section), one pdf and the other Excel. Fill in the following boxes: The value of final goods sold by firm 1 equals dollars The value of final goods sold by firm 2 equals dollars. The Value of final goods sold by firm 3 equals dollars The Value of final goods sold by firm 4 equals dollars Nominal GDP as the sum of the market values of the all final goods equals dollars Question 2 1 pts Consider the information in question 1. Fill in the following boxes: Value added by firm 1 equals dollars. Value added by firm 2 equals dollars Value added by firm 3 equals dollars Value added by firm 4 equals dollars. Nominal GDP as the sum of the values added equals dollars

Explanation / Answer

First we calculate value added by firm.

Value added by firm 1= Sales to households- Purchases of intermediates from firm 2

$540,000-$200,000=$340,000

Value added by firm 2= Sales to firm 1+ sales to firm 3- purchases of intermediates from firm3

= $200,000+$130,000-$150,000=$180,000

Value added by firm 3=Sales to firm 2+sales to firm 4-purchases of intermediates from firm2

=$150,000+$80,000-$130,000=$100,000

Value added by firm 4= Sales to households- purchases of intermediates from firm3

=$385,000-$80,000= $105,000

Value added by firm and value of final goods sold by firm are the same.

Nominal GDP is calculated by adding value of value added by all firms in a country

=$340,000+$180,000+$100,000+$105,000=$725,000

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