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.

Question

Business

Newt

15 August, 02:13

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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Answers (1)

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Maxim Bowen · Answer 1

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.