There are only two firms in an economy. Firm A buys from Firm B and vice versa.
Question:
There are only two firms in an economy. Firm A buys from Firm B
and vice versa. What is the value added for each firm? What is GDP ? Show that total factor income equals GDP.
Transcribed Image Text:
Total sales Wages, rent, and interest Purchases from other firm Output Firm A $1,000 $800 $100 $1,100 Firm B $3,400 $1,600 $1,000 $3,400
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The value added is the firms output recall that unsold output is treated as a sale ...View the full answer
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