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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

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

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 financed by an international loan of $20 Q: Calculate GDP using the three alternative approaches.<
Transcribed Image Text: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 financed by an international loan of $20 Q: Calculate GDP using the three alternative approaches.<
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