ECON 1P92 Lecture Notes - Lecture 2: Retained Earnings, Black Market, Gdp Deflator
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ECON 1P92 Full Course Notes
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Many firms produce outputs that are used as input by others. Outputs of firms that are used as inputs by other firms. Outputs that are not used as inputs by any other firms. Measures each firm"s contribution to total output. The amount of market value that is produced by that firm. Value added = revenue-cost of intermediate good or service: eg company buys iron ore for , produces steel and sells it for . Intermediate good is iron ore: steel is final product. Total value added for a product = final selling price of the product. Shirts sells for , and sum of value added equals (++). Total values added in the economy is gross domestic product(gdp): Measures of all final output that is produced in the economy, valued at market prices. Adding up value added avoids double counting. Must not add up each firm"s output overestimates gdp.