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ECON 311 Lecture Notes - Transfer Payment, Final Good, Sales Tax

75 views4 pages
blackcattle194
3 Feb 2013
School
UBC
Department
Economics
Course
ECON 311
Professor
Ratna Shrestha

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Document Summary

Blue words are notes taken in class page 1 of 4. Econ 311 jan 18 ch 20 the measurement of national income. ** this lecture he didn"t add in more information, pretty much just straight from the powerpoint. Production occurs in stages most firms produce outputs that are other firms" inputs: intermediate products and then final products. Each firm"s contribution to total output is its value added: value added = revenues - non-labour costs. Summing value added avoids the problem of double counting when measuring total output. Total value added in the economy is called gross domestic product (gdp). Gdp or gross domestic product, is the market value of all final goods and services produced in a country in a given time period. Both quantity and price together determine the total value of production. Gdp includes only those items that are traded in markets. For example, if you wash your own car, it is not accounted in gdp calculation.

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Related Questions

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    

 

 

What is the market for factors of production?

  1. 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. 

  2. 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.

  3. 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.

  4. 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.

  5. 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.