Question

Question 7 0.1 pts The table below describes a simple economy that produces wood and furniture with multiple stages in the production process. First, the timber company collects wood and sells it to the sawmill. The sawmill converts the wood to lumber and sells part of it to the public as a final good and part to a furniture manufacturer. The furniture manufacturer uses the lumber to produce furniture that is sold as a final good to the public Revenues Wages Intermediate Goods Profits Timber Company $400 $350 Sawmill $800 $200 $400 $200 Furniture Manufacturer $2,000 $1,300 $500 $200 $50 What is the value added by the furniture manufacturer?

Answer 1

Value added by the furniture manufacturer:

Value added = value of output - intermediate goods.

and, value of output = price * quantity.

value of output = revenue.

So, value added= revenue - intermediate goods.

Value added = $2000 - $500.

Value added = $1500

Thus, value added by the furniture manufacturer is $1500.