Please show me how to solve the problem step by step. Suppose the furniture prod

Question

Please show me how to solve the problem step by step.

Suppose the furniture production encompasses the following stages:

Stage 1: Trees sold to lumber company $800
Stage 2: Lumber sold to furniture company $1,500
Stage 3: Furniture company sells furniture to retail store $2,800
Stage 4: Furniture store sells furniture to consumer $5,400
a. What is the value added at each stage?
b. How much does this output contribute to GDP?
c. How would you answer (b) change if the lumber were imported from Canada?

Explanation / Answer

value added at stage 1$800 value added at step 2 is $1500-$800=$700 value added at step 3 is $ 2800 -1500=$1300 value added at stage 4 is $5400-$2800=$2600 net contribution to Gdp is = sum of value added at each step =$5400 if it would have been imported from canada than we have to substract the value of lumber =5400-800 =4600

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