Questions: Assume an economy where there are two producers: a computer components producer and a computer producer. Assume the computer components producer makes 3,000,000 worth of computer components in the current year, while incurring costs of 1,500,000 in labor and 500,000 in taxes. Suppose the computer components company sells all its product to the computer producer who builds five supercomputers. The costs of the computer producer include 3,000,000 in computer components, 800,000 in labor, and 200,000 in taxes. Suppose that the computer producer sells two of the supercomputers for 1,000,000 each to the domestic government, 1 supercomputer for 1,000,000 to a foreign government, and at the end of the year it had not sold the fourth and fifth computer. The unsold computers are carried on the computer manufacturer's books as an 2,000,000 increase in inventory. Using the income approach, what is the total cost for the computer producer? 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000

Transcript text: Assume an economy where there are two producers: a computer components producer and a computer producer. Assume the computer components producer makes $\$ 3,000,000$ worth of computer components in the current year, while incurring costs of $\$ 1,500,000$ in labor and $\$ 500,000$ in taxes. Suppose the computer components company sells all its product to the computer producer who builds five supercomputers. The costs of the computer producer include $\$ 3,000,000$ in computer components, $\$ 800,000$ in labor, and $\$ 200,000$ in taxes. Suppose that the computer producer sells two of the supercomputers for $\$ 1,000,000$ each to the domestic government, 1 supercomputer for $\$ 1,000,000$ to a foreign government, and at the end of the year it had not sold the fourth and fifth computer. The unsold computers are carried on the computer manufacturer's books as an \$2,000,000 increase in inventory. Using the income approach, what is the total cost for the computer producer? $\$ 5,000,000$ $\$ 4,000,000$ $\$ 3,000,000$ $\$ 2,000,000$ \$1,000,000