# soln1 - Problem Set #1 Solutions 1. First, fill out the...

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Problem Set #1 Solutions 1. First, fill out the gross production statements for the coal and steel producers. Gross Production Statement (Coal) Costs Receipts Raw Materials \$0m. Sales of Product \$75m. Wages \$50m. Inventory Change \$0m. Business Profits \$25m. Gross Value of Inputs \$75m. Gross Value of Output \$75m. Coal Producer’s GDP Costs Receipts Wages \$50m. Sales of Product - Raw Materials \$75m. Business Profits \$25m. Inventory Change \$0m. Value Added from Inputs \$75m. Value Added to Output \$75m. Gross Production Statement (Steel) Costs Receipts Raw Materials \$125m. Sales of Product \$200m. Wages \$40m. Inventory Change \$0m. Business Profits \$35m. Gross Value of Inputs \$200m. Gross Value of Output \$200

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Steel Producer’s GDP Costs Receipts Wages \$40m. Sales of Product - Raw Materials \$75m. Business Profits \$35m. Inventory Change \$0m. Value Added from Inputs \$75m. Value Added to Output \$75 a) (i) Product approach: Coal producer produces 15 million tons of coal at \$5/ton, which adds \$75 million to GDP. The steel producer produces \$10 million tons of steel at \$20/ton, which is worth \$200 million. The steel producer pays \$125 million for 25 million tons of coal at \$5/ton. The steel producer’s value added is therefore \$75 million. GDP is equal to \$75 million + \$75 million = \$150
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## This note was uploaded on 07/17/2008 for the course ECON 502.02 taught by Professor Mccafferty during the Spring '08 term at Ohio State.

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soln1 - Problem Set #1 Solutions 1. First, fill out the...

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