ECON 1P92 Lecture Notes - Lecture 3: Intermediate Good, Fixed Investment, Factor Cost

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11 Oct 2016

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ECON 1P92 Full Course Notes

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Many firms produce outputs that are used as inputs by other firms. Outputs of firms that are used as inputs by other firms. Outputs that are not used as inputs by any other firms. The amount of market value that is produced by that firm. Value added=revenue-costs of intermediate goods and services ex. Total value added for a product = final selling price of the product. Shirt sells for 20, and sum of value added (2+3+15) equals 20. Also, value added = income to factors of production. Total value added in the economy is gross domestic product (gdp): Measure of all final output that is produced in the economy, valued at market prices. Must not add up each firm"s output-overestimates gdp ex. adding up cotton, plus cloth, plus shirt overestimates value of production-prices of cotton and cloth are included in price of shirt. Add up the total value added from domestic production. Add up the total expenditure on domestic output.

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Intermediate goods are goods and services that are purchased for resale or for further processing or manufacturing. Final goods are consumer goods, capital goods, and services that are purchased by their final users, rather than for resale or for further processing or manufacturing. Including the value of intermediate goods in the measure of real GDP would amount to multiple counting, and therefore distort the value of GDP. Value added is the market value of a firm’s output less the value of the inputs the firm has bought from others.

Using the table below, calculate the total sales values, value-added, and fill in the missing boxes. The product is assembled for sale is a fancy wool suit.

Stages of Production	Sales Value of Materials or Product	Value Added
	$0
Firm A: Sheep Ranch		$120
Firm B: Wool Processor	$180
Firm C: Suit Manufacturer	$220
Firm D: Clothing Wholesaler		$50
Firm E: Retail Clothier (Market)		$80
Total Sales Value
Total Value Added

amethysttrout886

What is the market for factors of production?

What is the market for factors of production?
1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages.
What is the money market?
1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.
Who are the three economic actors in the circular flow model?
1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.
How is the national income of an economy determined?
1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.
What is GDP?
1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

I need help right now, please

1- Goods that are not sold during the year are included as part of that year's investment in calculating GDP.
A- True
B- False

2- When the nominal GDP has increased in the United States, we know that:

A- the U.S. price level has increased
B- the U.S. price level has decreased.
C- U.S. output of goods and services has increased.
D- Either the U.S. output of goods and services or the price level has increased.
E- Both the U.S. output of goods and services and the price level have increased.

3- Fill in the blank: GDP is the total value of ________ produced for the marketplace during a given year, within the nation's borders

A- all goods
B- all goods and services
C- all final goods
D- all final goods and services
E- all final and intermediate goods and services

4- Structural unemployment is considered a microeconomic problem.

A- True
B- False

5- The unemployment rate in the United States is defined as the number of unemployed divided by _____.
A- the U.S. population
B- the number of employed plus the number of unemployed
C- the U.S. population over the age of 16
D- the number of employed
E- the number of employed minus the number of unemployed

6- If Americans buy $500 billion worth of foreign goods and services, and foreigners buy $200 billion worth of American goods and services, then net exports for the United States are equal to _____.
A. $100 billion
B. $200 billion
C. -$300 billion
D. $500 billion
E. $700 billion

7- Discouraged workers are people who used to work, but no longer want a job.

A- True
B- False

8- In the expenditure approach, GDP is equal to _____.

A. C + I + G + exports - imports

B. C + I + G

C. C + I + G + exports

D. C + I + G + imports

E. C + I + G + exports + imports

9- U.S. GDP measures the production of goods and services by Americans, regardless of which country they reside in when they produce those goods and services.

A- True
B- False

taneagle172

ECON 1P92 Lecture Notes - Lecture 3: Intermediate Good, Fixed Investment, Factor Cost

ECON 1P92 Full Course Notes

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