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5. [Macroeconomics: The Big Picture Measuring Production, Income, and the Spending Of Nations] Consider the following data on a firm that makes and sells
5. [Macroeconomics: The Big Picture Measuring Production, Income, and the Spending Of Nations] Consider the following data on a firm that makes and sells pieces of pottery_ The firm already has a pottery wheel and sculpting tools, but needs to rent an ofT1ce space and a pottery kiln. Revenue Costs Rental Fee For OtT1ce Space Rental Fee For Kiln Clay Paint Materials Wages S1500 sooo S200 Sloo S50 S450 (a) Calculate the value added by this farm. (Hint: what are the intermediate goods?) (b) Show that value added equals capital income plus the labor income paid by the pottery firm. (Hint: what comprises capital income?) (c) Suppose that there is a sudden increased interest in pottery products. This causes two things First, the firm's revenue rises from to S1800_ Second, there is an increased demand for kilns, and they become more expensive to rent_ The firm must now pay $300, instead Of $200. Please repeat (a) and (b) with these new values.
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