Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture.

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it

to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of

leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for

$2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide

produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for

$20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced

20 couches during 2015 and sold each one during that year for $2,600. What was the

economy's GDP for 2015?

a. $25,000

b. $52,000

c. $57,000

d. $65,000

I was told the answer in C but I am not sure why? I was told you only include GDP for that year?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Reporting And Analysis

Authors: Lawrence Revsine, Daniel Collins

5th Edition

0078110866, 978-0078110863

More Books

Students also viewed these Economics questions

Question

Would you be willing to work with them?

Answered: 1 week ago

Question

Z1 g gc + V 2gc + u + P + Aq = 22 g 2 + 2gc gc +u + Pv + Awsf

Answered: 1 week ago

Question

Relax your shoulders

Answered: 1 week ago

Question

Keep your head straight on your shoulders

Answered: 1 week ago