Please show work John B. Retired owns a house on a 10-acre lot filled with apple
ID: 1123604 • Letter: P
Question
Please show work
John B. Retired owns a house on a 10-acre lot filled with apple trees. Each year he hires a few workers to pick the apples and he sells them to Betty's Pies for $4,000. Betty uses the apples to makes pies that she sells for $9,000 to local restaurants. The local restaurants sell the pies (by the slice) to consumers for $12,000. As a result of these transactions GDP increases by $ The value added by John is $ , the value added by Betty is $ restaurants is $ not enter any other characters and the value added by the local Enter whole numbers in each blank. DoExplanation / Answer
GDP in this case will increase by the value of final good.
The final good in this case is pie that is sold to consumers for consumption.
Sales revenue of pie is $12,000.
So,
As a result of these transactions, GDP increases by $12,000.
value added = value of output - intermediate consumption
John has sold apples for $4,000. There is no mention of cost of John. So, intermediate consumption would be $0.
Value added by John = Value of output - Intermediate consumption = $4,000 - $0 = $4,000
So, the value added by John is $4,000.
Betty has sold pies to restaurant for $9,000. She has purchased apples from John for $4,000.
Value added by Betty = Value of output - Intermediate consumption = $9,000 - $4,000 = $5,000
So, the value added by Betty is $5,000.
The local restaurant has sold pies to consumers for $12,000. It has purchased the pies from Betty for $9,000.
Value added by Local Restaurant = Value of output - Intermediate consumption = $12,000 - $9,000 = $3,000
So, the value added by Local Restaurant is $3,000.