What exactly is 'value added' anyway? IIIa

Overview

Students will explore Canada's economic value in the world market, and the factors behind the price of and demand for products.

Suggested duration, procedures and solutions are included, but all can be adapted to your students' particular interests or abilities.

Contributors: David Larwood, Teacher, Lord Asquith School, Asquith, Saskatchewan, with editorial input and subject matter expertise from Gaye Ward, Cindy Heffernan, Lynda Kemp and Steve Boyd of Statistics Canada's Agriculture Division.

Objectives

• To list import and export countries and the agri-food products involved
• To explain why products are imported and exported
• To understand terms such as 'value added' and 'gross domestic product' (GDP)

Suggested grade levels and subject area

Intermediate
Business Studies, Canadian Studies

Duration

see Classroom instructions

Resources

• "What exactly is 'value added' anyway?" by Christian Wolfe, page 53 and "The agri-food industry—it's everywhere!" by Benoit Basillais, page 45 in Canadian Agriculture at a Glance

Classroom instructions

1. Have students read the article (see Resources) and answer the following:
   1. (One period) Why does Canada import products from the United States?
   2. (30 minutes) Define value added and gross domestic product. How they are determined?

Evaluation

Suggested responses:

1. We do not or cannot produce the commodity because of our climate, or we cannot produce enough. Our proximity to the United States makes transportation cheap and imports practical. Free trade has reduced the tariffs on many imported products. The United States can produce the commodity more cheaply than Canada. The product provides alternatives in our diet.
2. Gross domestic product is the sum of the value added by labour and capital in all Canadian products.
   Value added is the total return to labour and capital, i.e., the difference between a good's final value and the value of the capital and labour required to produce it.

Please e-mail comments or examples of how you used this exercise in your class.