The following outline provides a complete description of all economic activity i
ID: 1138607 • Letter: T
Question
The following outline provides a complete description of all economic activity in trivialand for 2014. Draw up versions of tables 3 and 4 for trivialand showing GDP computed in two different ways. i) there are thousands of farmers but only two big business firms in Trivialand: Specific motors (an auto company) and super duper(a chain of food and markets). there is no government and no depreciation. ii) specific motors produced 1000 small cars which it sold at 6000 each and 100 trucks sold at 8000 each. Consumers brought 800 of the cars, and the remaining 200 cars were exported to the U.S. Super duper bought all the trucks. iii) Sales at Super duper markets amounted to $14 million, all of it sold to its consumers. iv.) all farmers in Trivialand are self-employed and sell all of their wares to super duper. v)the costs incurred by all of trivialand's business were as follows:
Explanation / Answer
1) GDP as sum of final demands (in millions): 20.8
Working:
Specific motors
Super Duper
Total
C
4.8
14
18.8
I
0.8
0.8
G
X
1.2
1.2
Y
20.8
2) GDP as sum of incomes (in millions): 20.8
Working:
Specific motors
Super Duper
Farmers
Total
Wage
3.8
4.5
8.3
Interest
0.1
0.2
0.7
1.0
Rent
0.2
1.0
2.0
3.2
Profits
2.7
1.3
4.3
8.3
Y
20.8
Computation of profits:
Specific motors
Super Duper
Farmers
Revenues
6.8
14.0
7.0
Wage
-3.8
-4.5
Interest
-0.1
-0.2
-0.7
Rent
-0.2
-1.0
-2.0
Intermediate goods
-7.0
Profit
2.7
1.3
4.3
Specific motors
Super Duper
Total
C
4.8
14
18.8
I
0.8
0.8
G
X
1.2
1.2
Y
20.8
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