Question
(Kindly answer the questions and give a brief explanation...I want to understand the reasons behind each answer) An online social networking business in the U.S.
(Kindly answer the questions and give a brief explanation...I want to understand the reasons behind each answer)
An online social networking business in the U.S. generates $100 million of revenue by creating and selling advertising opportunities to domestic consumer products firms. It does not charge users of the site. It pays $50 million to its programmer-workers, $10 million in rent to landlords in Silicon Valley, $20 million to shareholders, and $20 million for computing equipment.
(i) (2 points) What is this business' value-added?
(ii) (2 points) Does it produce an intermediate or final good?
(iii) (3 points) If one used the expenditure approach, how would this business's contribution to GDP be accounted for? (i.e. to which category C, I, G or NX would this firm's value added contribute and why).
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