[10 marks] Readmania produces books. The sales of Readmania last year (2017) wer

Question

[10 marks] Readmania produces books. The sales of Readmania last year (2017) were $23million To produce the books Readmania purchases the text from 6 authors-each author was paid $0.5million for their intellectual property on the text. Paper was purchased from Flatpulp for $6.5million. Glue and cardboard was purchased from Bindersplus at a cost of $0.3million and the services of a Printing Agent to print all the copies was hired at a cost of $7million. All of these firms are located in Australia, the inputs were all produced in 2017 and none of these firms purchases intermediate goods. 1. Using the value added/production approach to calculating GDP- explain how much Readmania contributed to GDP in 2017. a. [10 marks] How does the rate of immigration influence the level of GDP per person? Does it matter what educational level the immigrants have achieved before they arrive in the new country? 2.

Explanation / Answer

In order to calculate how much readmania's contribution in GDP in 2017 ,we have to find total value added by readmania.

So, value added =sales - intermidiate consumption

{Here intermediates are 6 authors (0.5 millions*6) +cost of paper+glue and cardboard cost +cost of Agent services .

=(0.5*6)+6.5+0.3+7

=3+6.5+0.3+7

=16.8 million

Sales =23 millions

Hence value added by readmania=23millions-16.8 million

=$6.2 million

Hence , readmania contributed $6.2 million to GDP in 2017.

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