Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 4500 tonnes of wheat, sells 1500 tonnes of wheat to firm B at $20 per tonne, exports 2500 tonnes of wheat at $20 per tonne, and stores 500 tonnes as inventory. Firm A pays $50,000 in wages to consumers. Firm B produces 30,000 loaves of bread and sells all of it to domestic consumers at $3 per loaf. Firm B pays consumers $20,000 in wages. In addition to the 30,000 loaves of bread consumers buy from firm B, consumers import and consume 35,000 loaves of bread, and they pay $1 per loaf for this imported bread. Calculate gross domestic product using (a) the product approach, (b) the expenditure approach, and (c) the income approach. a. Using the product approach, the value added by firm A is $ the value added by firm B is $ and GDP in this economy is $

Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 4500 tonnes of wheat, sells 1500 tonnes of wheat to firm B at $20 per tonne, exports 2500 tonnes of wheat at $20 per tonne, and stores 500 tonnes as inventory. Firm A pays $50,000 in wages to consumers. Firm B produces 30,000 loaves of bread and sells all of it to domestic consumers at $3 per loaf. Firm B pays consumers $20,000 in wages. In addition to the 30,000 loaves of bread consumers buy from firm B, consumers import and consume 35,000 loaves of bread, and they pay $1 per loaf for this imported bread. Calculate gross domestic product using (a) the product approach, (b) the expenditure approach, and (c) the income approach. a. Using the product approach, the value added by firm A is $ the value added by firm B is $ and GDP in this economy is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Q1). Suppose the labor market is initially at its equilibrium, i.e., the labor supplied equals the labor demanded. Now suppose IBM develops a new computer chip that makes computer incredibly faster. Explain and show graphically how the arrival of a new, more productive technology affects the labor market. Draw the full graph and provide a detailed explanation of the effect. Label the axes/curves, explain why either the aggregate labor demand curve or the aggregate labor supply curve shifts and describe the economic mechanism that moves the economy from the old to the new equilibrium.
Assume an economy with a coal producer, a steel producer, and some consumers. (There is no government.) In a given year, the coal producer produces 15 million tonnes of coal and sells it for $6 per tonne. The coal producer pays $70 million in wages to consumers. The steel producer uses 45 million tonnes of coal as an input into steel production, all purchased at $6 per tonne. Of this, 15 million tonnes of coal comes from the domestic coal producer, and 30 million tonnes is imported. The steel producer produces 20 million tonnes of steel and sells it for $35 per tonne. Domestic consumers buy 16 million tonnes of steel, and 4 million tonnes are exported. The steel producer pays consumers $40 million in wages. All profits made by domestic producers are distributed to domestic consumers. a. Determine GDP using (i) the product approach, (ii) the expenditure approach, and (iii) the income approach. (i) Using the product approach, the value added by the coal producer is $ million, the value…
Consider an economy that produces wood, boats, and has a marketing agency. This year domestic wood production generates revenues of $80. Of this $80 worth of wood, $40 were purchased by the boat producer and $40 were sold abroad to a foreign company. The wood producer paid $40 worth of wages and $10 worth of taxes. The boat producer combines the services of the marketing agency, the wood it purchased from the wood producer, and $20 worth of labor (wages) to produce $120 worth of boats. Its revenues, which include a boat produced in the previous year and that was carried as inventory, are $130. Domestic families buy all these boats. This company pays $10 worth of taxes. The marketing agency, whose sole client is the boat company, generates a revenue of $40 which is enough to cover its labor costs of $40. This company pays no taxes. The government in this economy uses the $20 worth of taxes and builds a port. The cost of the port is $40 that are paid to workers. This port is partially…
In 2013, Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruits were used exclusively for final consumption and nothing else was produced. In 2013, a kilo of apples sold for $7 while a kilo of bananas sold for $10. In 2014, Adanac produced only 10 kilos of apples but produced 45 kilos of bananas. In 2014, prices were $8 per kilo of apples and $8 per kilo of bananas. Using 2013 prices, economists estimate that potential GDP is $700 in 2014 The output gap in 2014 is OA. $180. OB. $360. O C. -$360. OD. -$180. Et
Specific Factors Model. Nom. Wage (P*MPL) Suppose that here are two goods, Bicycles (Industry "B") and Grapefruit (“G"). Bicycles use labor and capital to produce, while Grapefruit use labor and land. P*MPL(B) P'MPL(G) This country exports bicycles and there is an increase in the world relative price. Show what happens to labor in the bicycle industry. Labor in Grapefruit> ELabor in Bicycles What happens to labor in each good, and to the country's nominal wage and real wage?
If a country's GDP is $200 million, and its total population is 10,000, but only 8,000 of these people work, the country's per capita income is: O a) $11,111. Ob) $20,000. O c) $25,000. d) $100,000.
Consider a company operating in a competitive market. The company sells units of output and receives a price of $30 per unit, and pays a daily market wage of $285 to each worker it employs. In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers. Value of the Marginal Product of Labor Labor Output Marginal Product of Labor (Number of workers) (Units of output) (Units of output) (Dollars) WAGE (Dollars per worker) 500 450 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) 400 Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first worker should be plotted with a horizontal coordinate…
Assume that a firm buys all the parts that it puts into a computer for $1,200, pays its workers $1,200 to fabricate the computer, and sells the computer for $3,000. The value added of the firm is:
Assume that a firm buys all the parts that it puts into an automobile for s10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is:
Consider an economy with two firms. Firm 1 produces iron, employing workers and using machines to produce the iron. It sells the iron for K1500 to Firm 2, which produces roofing sheets. Firm 1 pays its workers K1000, leaving K500 in profit to the firm. Firm 2 buys the iron and uses it, together with workers and machines, to produce roofing sheets. Revenues from car sales are K3000. Of the K3000, K1500 goes to pay for iron and K750 goes to workers in the firm, leaving K750 in profit to the firm. Required What is the final value of goods produced? What is the total value added and What is total income? Discuss three complications in computing national income.
What is the value of the market basket for 2006? Quantity Price (2006) Quantity Price Item (2006) (2007) (2007) Restaurant meals 100 $10.00 100 $12.00 Weeks of parking 50 $100.00 50 $97.50
The economy of country A has two sectors: wheat-growing, and flour-making. In 2015, the wheat growers paid their workers a total of $300 and produced a total of 500 kg of wheat. They sold 100kg directly to consumers, and 400 kg to the flour mills. The selling price for 1 kg of wheat was $1.5. The same year, flour producing firms paid their workers $350. They produced 350kg of flour: 300kg were sold on the local market, and 50kg were shipped abroad as exports. The selling price for 1 kg of flour is $4. Compute the GDP for country A in 2015