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3 July, 17:11

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.

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  1. 3 July, 17:15
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    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.
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