Answered: a. Calculate GDP as the value-added in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4.) The small economy of pizzeria produces three goods(bread, cheese, and pizza) each produced by a separate company. THE bread and cheese companies produce all the inputs they need to make bread and cheese, respectively. The pizza company uses the bread and cheese from the other companies to make its pizzas. All three companies employ labor to help produce their goods, and the difference between the value of goods sold and the sum of labor and input costs is the firm's profit.

a. Calculate GDP as the value-added in production.

b. Calculate GDP as spending on final goods and services.

c. Calculate GDP as factor income.

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