7. Use the following table showing the production of 500 boxes of Wheaties cereal to calculate the contribution to GDP using the value-added approach.
| Participants | Cost of Materials | Value of Sales | Value Added |
| Farmer | $0 | $550 | ----- |
| Mill | $550 | $900 | ------ |
| Cereal maker | -------- | ------ | $300 |
| Wholesaler | ------- | $1750 | ------ |
| Grocery store | ------- | ------ | $200 |
a. Calculate the value-added at each stage of production.
b. What is the market value of the ]inal good?
a. The table:
| Participants | Cost of Materials | Value of Sales | Value Added |
| Farmer | $0 | $550 | $550 |
| Mill | $550 | $900 | $350 |
| Cereal maker | $900 | $1200 | $300 |
| Wholesaler | $1200 | $1750 | $550 |
| Grocery store | $1750 | $1950 | $200 |
| $1950 |
calculation: Value added is the amount of change in the value of the good at the end of each process.
b. Market value of the final good is $1950. We can derive this in two ways: (i) It is the last cell of the second column, that is, it is the value of sales at the final stage. (ii) It is the sum total of "Value added" column.
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