420worksheet1b

420worksheet1b - XYS sells three of the supercomputers for...

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ECON 420 – 002 & 004, Fall 2008 Worksheet 1 - addendum 1. ABC Computer Company has a $20,000,000 factory in Silicon Valley. During the current year ABC builds $2,000,000 worth of computer components. ABC’s costs are labor: $1,000,000 interest on debt: $100,000 Taxes: $200,000 ABC sells all its output to XYZ Supercomputer. Using ABC’s components, XYZ builds four supercomputers at a cost of $800,000 each ($500,000 worth of components, $200,000 in labor costs, and $100,000 in taxes per computer). XYZ has a $30,000,000 factory.
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Unformatted text preview: XYS sells three of the supercomputers for $1,000,000 each. At year’s end, it had not sold the fourth. The unsold computer is carried on XYZ’s books as an $800,000 increase in inventory. a. Calculate the contributions to GDP of these transactions using the expenditure approach, output approach and income approach, showing all three approaches give the same answer. b. Repeat part (a), but now assume that, in addition to its other costs, ABC paid $500,000 for imported computer chips....
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