Abc computer company, The unsold computer is carried on

Abc computer company

Assignment Help Business Economics

Reference no: EM137230

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; and 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.

XYZ 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, showing that 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.

Reference no: EM137230

Questions Cloud

Cross elasticity theory : Explain how is the cross elasticity theory used to empirically define economic markets.

Law of demand : Do these public goods conform to the law of demand. For which public supplies is demand price elastic.

Perfectly competitive market : Is the price mechanism of a perfectly competitive market a good mechanism to allocate gasoline.

Increased demand by china : Expecting that wool prices would remain high, wool producers raised a lot more sheep.

Abc computer company : The unsold computer is carried on XYZ's books as an $800,000 increase in inventory.

Evaluate rusals prediction by using the demand and supply : Evaluate Rusal's prediction by using the demand and supply equations to make a prediction about the movement of world aluminum price.

Bavarian crystal works : As Bavarian Crystal Works is only one for many crystal producers in the world market, it can wholesale as many of the decanters as it wishes for $50 apiece.

Illustrate the significance of resource pricing : Illustrate the significance of resource pricing explain rule or criteria of employing for resources under pure and perfect competition.

Downward-sloping demand curve : Suppose that the demand for orange increases. Carefully explain how the rationing function of price will restore market equilibrium.

User Account

All Pages