Question

Mother Nature produces dirt. Tlaloc turns the dirt into brick, and Bob creates brick houses. The economy is characterized by the table below. Note all figures are measured in dollars. Mother Tlaloc Nature Bob 1. What is the value added for Mother Nature? Value of Sales 2850 (5) Dirt (S) 0 7750 22500 Number 12850 10 Bricks (S) 0 0 7750 10000 900 Wages (S) 1000 3700 Interest Payments (S) Rent (S) 600 Profits (S) 250 Total Expenditure(S) 1000 600 2. What is the value added for Tlaloc? Number 400 7750 650 22500 3. What is the value added for Bob? Number $ 0

Answer 1

The nation's GDP is $600, which is the total value of the final goods produced including trees, lumber, and bookshelves.

Step-by-step explanation:

The Gross Domestic Product (GDP) of a nation is the total value of all final goods and services produced within the country's borders in a given time period.

In this case, the final goods produced by the nation include trees, lumber, and bookshelves. The value of the final goods can be calculated by summing up their respective values: $200 (trees) + $150 (lumber) + $250 (bookshelves) = $600.

Therefore, the nation's GDP is $600.

Answer 2

The GDP of the nation is the market value of the final goods produced, which in this case is the $250 value of the bookshelves made from the lumber.

Step-by-step explanation:

To calculate the Gross Domestic Product (GDP) of a nation, we assess the value of the final goods and services produced. In the case of this small nation, the production process includes three stages: harvesting trees, processing them into lumber, and then turning the lumber into bookshelves. The value of the final product is the sum of the market values of the final goods produced, which in this case are the bookshelves.

The country cut down trees worth $200 and turned a portion of them into $150 worth of lumber. Not all of the trees became lumber; hence only the lumber's value contributes to GDP as it moves to the next production phase. Finally, $100 worth of lumber was used to create $250 worth of bookshelves. When measuring GDP, we only consider these bookshelves' market value since they are the final product. Therefore, the GDP of this nation is $250, which is the market value of the bookshelves, the final good produced.