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Acme Steel Works produces 2000 tons of pig iron worth $20 per ton. It puts 500 tons of pig iron into storage for next year and uses the rest (1500 tons of pig iron) to produce 1000 tons of steel worth $60 per ton. The entire production of steel is then sold. Overall, in production, Acme pays wages of $25,000, it buys $20,000 worth of coal and $10,000 worth of vanadium, and pays $3,000 in business taxes.

Acme's contribution to GDP is:

$20,000.
$67,000
$70,000.
$100,000.
$40,000
$50,000.

Respuesta :

jepessoa

Answer:

$40,000

Explanation:

The value added method adds the contribution of every sector in the economy to the GDP. The total value added will always equal the final price of the goods and services sold. In this case we need to determine the price of Acme's production:

  • 500 tons of pig iron x $20 = $10,000
  • 1,000 tons of steel x $60 = $60,000
  • total = $70,000

Now we have to subtract the value of the materials used by Acme:

  • coal = $20,000
  • vanadium = $10,000
  • total = $30,000

Acme's contribution to GDP = $70,000 - $30,000 = $40,000

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