Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 19: Problem 14

An artist buys scrap metal from a local steel mill as a rav material for her metal sculptures. Last year, she bough \(\$ 5,000\) worth of the scrap metal. During the year, she pro duced 10 metal sculptures that she sold for \(\$ 800\) each to a local art store. The local art store sold all of the sculp tures to local art collectors, at an average price of \(\$ 1,000\) each. For the 10 metal sculptures, what was the total valu added by the artist, and what was the total value added by the local art store?

Short Answer

Expert verified
The total value added by the artist is \$3000, and the total value added by the local art store is \$2000.

Step by step solution

01

Calculate Value Added by the Artist

Calculate the total selling price of the sculptures made by the artist, which is \(10 \times \$800 = \$8000\). Then, subtract from it the cost of raw materials, which is \$5000. Hence, the value added by the artist is \(\$8000 - \$5000 = \$3000\).
02

Calculate Value Added by the Art Store

Calculate the total selling price of the sculptures sold by the art store, which is \(10 \times \$1000 = \$10000\). Then, subtract from it the cost of sculptures bought from the artist, which is \$8000. Hence, the value added by the artist is \(\$10000 - \$8000 = \$2000\).

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Ireland is one of the few countries where GDP and GNP differ significantly. Using GDP per person, Ireland has the third-highest income per person in Europe. An article on the Financial Times website stated, "With GDP being about 20 percent larger than GNP, Irish people appear (when using GDP per person) to be richer than what they feel they are." Briefly explain the author's reasoning.

Suppose the amount the federal government collects in personal income taxes increases, while the level of GDP remains the same. What will happen to the values of national income, personal income, and disposable personal income?

A student remarks: "It doesn't make sense that intermediate goods are not counted in GDP. A computer chip is an intermediate good, and without it, a laptop won't work. So, why don't we count the computer chip in GDP?" Provide an answer to the student's question.

Briefly explain whether you agree with the following statement: "In years when people buy many shares of stock, investment will be high and, therefore, so will GDP."

What are the differences between national income, personal income, and disposable personal income?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free