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From the following description of a small economy, determine the following:

1. What is the value added by each member of the economy?
2. What is the total produced by society (avoid double counting)?
3. What is the value of the creative economy?

- A company produces paint valued at $100.
- A company produces an easel valued at $50.
- A company produces four canvases valued at $25 each.
- A painter uses the paint, easel, and all four canvases to produce four paintings, each worth $150.
- A museum buys two of these paintings to display. The museum earns $800 in tickets.

Answer :

The total produced by the society is $1,400, and the value of the creative economy is $1,400.

In this economy, there are four companies; one produces paint worth $100, another produces an easel worth $50, and the other two produce four canvases valued at $25 each. A painter purchases the paint, easel, and four canvases to create four paintings worth $150 each, and two of those paintings are purchased by a museum that earns $800 in tickets.The value-added is calculated by taking the value of output and subtracting the value of intermediate inputs that were used in production. For instance, the first business that produces paint contributes $100 in value added to the economy. The second company that produces easels contributes $50 in value added to the economy. The last two companies that produce four canvases valued at $25 each contribute $200 in value added to the economy. Since there are no other intermediate inputs, the total value added to the economy is $350. To avoid double-counting, we must add up all of the final outputs created in the economy, which include four paintings worth $150 each, or a total of $600, as well as the $800 in ticket sales earned by the museum. The total output of the economy is $1,400 ($600 + $800). Since creativity is being used in the production process, the value of the creative economy is $1,400. Therefore, the value added by each member of the economy is $100 for the first business, $50 for the second business, and $100 for the third and fourth businesses combined. The total produced by the society is $1,400, and the value of the creative economy is $1,400.

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