A lumberyard pays workers $600 in wages to cut down lumber, which is then sold to a wood processing factory for $1,000. The wood processing factory pays workers $300 to process the wood, which is then sold to a furniture factory for $1,900. The furniture factory pays workers $950 to produce furniture, which is then sold for $8,400.
(a) Holding all else equal, what is the profit made by the lumberyard?
(b) Holding all else equal, what is the profit made by the wood processing factory?
(c) Holding all else equal, what is the profit made by the furniture factory?
(d) What is the sum of all the wages in this example?
(e) What is total GDP, according to the income approach?

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The Answer of A lumberyard pays workers $600 in wages to cut down lumber, which is then sold to a wood processing factory for $1,000. The wood processing factory pays workers $300 to process the wood, which is then sold to a furniture factory for $1,900. The furniture factory pays workers $950 to produce furniture, which is then sold for $8,400.
(a) Holding all else equal, what is the profit made by the lumberyard?
(b) Holding all else equal, what is the profit made by the wood processing factory?
(c) Holding all else equal, what is the profit made by the furniture factory?
(d) What is the sum of all the wages in this example?
(e) What is total GDP, according to the income approach?

A Lumberyard Pays Workers $600 in Wages to Cut Down