Question

A mechanic builds an engine and then sells it to a customized body shop for $7,000. The body shop inserts the engine into the car and resells it to a dealer for $20,000. The dealer then sells the finished vehicle for $42000. a. When the consumer drives off with the car, GDP increases by $ . b. What is the value added by the mechanic? (Assume that the value of the materials used to build it is zero.) $ c. What is the value added by the body shop? $ d. What is the value added by the dealer? $ e. The total value added is the amount that GDP increased.

Answer 1

Answer:

The answers are:

A) The GDP increases by $42,000 when the consumer drives off with the car (a new final product was sold).

B) The mechanic added $7,000 to the car´s value.

C) The body shop added $13,000 to the car´s value.

D) The car dealer added $22,000 to the car´s value.

E) The total value added (by the mechanic, body shop and car dealer) is $42,000, the same amount as the GDP increased.

Explanation:

Answer 2

Value-added means the amount by which the value of an article is grown at each level of its production, exclusive of initial costs. The amounts of the given case are:

• As a new final product was sold, the GDP raises by $42,000 when the consumer drives off with the car.

• B) The mechanic added $7,000 to the value of the car.

• C) The body shop added $13,000($20,000-$7,000) to the value of the car.

• D) The car dealer-added $22,000 ($42,000-$20,000) to the value of the car.

• E) The total value added (by the mechanic, body shop, and car dealer) is $42,000, the same amount as the GDP increased.

What is the value-added?

Value-added refers to the difference between the price of a product or service and the cost of producing it. The price is computed by what customers are willing to pay based on their perceived value and Value-added products many times apply to the agriculture industry.

Therefore,

• GDP rises by $42,000, at the time when the final product was sold out.

• The mechanic added $7,000 because of the customized body shop.

• The body shop added the amount of $13,000 because the car resale at $20,000 and the opening balance was $7,000, them the difference between both is the net amount of shop added.

• The amount of dealer-added is $22,000 after deducting the amount of finished vehicle to the resale value of the car.

• The amount of total value-added would be $42,000, as given in the question.

Learn more about value-added, refer to:

https://brainly.com/question/22241921