An artist buys scrap metal from a local steel mill as a raw material for her sculptures. Last year, she purchased $5 comma 000 worth of scrap metal. With the steel she produced 10 authentic sculptures that she sold for $800 each to a local art dealer. The art dealer then sold all of the sculptures to art collectors for an average of $1 comma 000 each. What was the total value added of the artist, and what was the total value added of the local art store?

1. $1000 (sale price) - $800 (Dealer price) = $200

2. $200 * 10 sculptures = $2000 of total value added

Explanation:

STEPS

1)The artist pays $5,000 for the intermediate goods (scrap metal) and sells the finished goods (10 sculptures) for $1 comma 1,000 each.

The value added for the artist equals $3000

2)The art dealer pays $800 for the intermediate goods (sculptures) and sells the finished goods (sculptures) for $1000 each. Calculate the difference between the price the dealer paid for the sculptures and the amount for which the dealer sold the sculptures.

3) $1000 (sale price) - $800 (Dealer price) = $200

4) $200 * 10 sculptures = $2000 of total value added