# Consider an economy composed of just two firms: Orange Inc. and Juice Inc. Orange Inc. grows and sells oranges while Juice inc. produces and sells orange juice. from the following information determine GDP using three approaches: expenditures, income and value added

Consider an economy composed of just two firms: Orange Inc. and Juice Inc. Orange Inc. grows and sells oranges while Juice inc. produces and sells orange juice. from the following information determine GDP using three approaches: expenditures, income and value added

Orange juice

GDP= Sales ( To public + juice Inc.)

= \$10000+ \$25000= \$35000

GDP= \$35000

Income method

GDP = wages + profit

=\$10000+\$25000

GDP= \$35000

As expenses is not given we can not calculate it by expenditure approach

Juice Inc.

GDP= Sales – intermediate consumption

= \$40000- \$25000

GDP = \$15000

Income Approach

GDP= wages ( profit is 0)

GDP = \$ 15000

we cannot use expenditure approach as no expenses are given

Asked on May 18, 2017 in
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