Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a
Question:
Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 5000 tonnes of wheat, sells 2000 tonnes of wheat to firm B at $30 per tonne, exports 2500 tonnes of wheat at $30 per tonne, and stores 500 tonnes as inventory. Firm A pays $50 000 in wages to consumers. Firm B produces 50,000 loaves of bread, and sells all of it to domestic consumers at $2 per loaf. Firm B pays consumers $20 000 in wages. In addition to the 50 000 loaves of bread consumers buy from firm B, consumers import and consume 15 000 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.
(c) The income approach.
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