Question

Intelligence Incorporated produces 300 computer chips and sells them for $200 each to Bell Computers. Using the chips and other labor and materials, Bell produces 300 personal computers. Bell sells the computers, bundled with software that Bell licenses from Macrosoft at $50 per computer, to PC Charlie’s for $800 each. PC Charlie’s sells the computers to the public for $1,000 each. Calculate the total contribution to GDP using the value-added method

Answer 1

ANSWER:

Value added by intelligence inc. = no of computer chips * price of each chip = 300 * $200 = $60,000

Value added by macrosoft = no of computers * price per license = 300 * $50 = $15,000

Value added by bell = no of computers * selling price to charlie - price in software - price in chips = 300 * $800 = $240,000 - $15,000 - $60,000 = $165,000

Value added by pc charlie = no of computers * selling price of computers - price of computers sold by bell = 300 * $1,000 - $240,000 = $300,000 - $240,000 = $60,000

contribution to gdp = value added by intelligence inc, + value added by macrosoft + value added by bell + value added by pc charlie = $60,000 + $15,000 + $165,000 + $60,000 = $300,000