Economics - Consider an economy with three firms
Question # 00839272
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Updated on: 03/06/2023 01:55 AM Due on: 03/06/2023
Economics
Consider an economy with three firms:
• Firm 1 sells $75 of steel to Firm 3. From its earnings, it pays $25 in wages and keeps $50 in profits.
• Firm 2 sells $30 of rubber to Firm 3. Firm 2 pays $10 in wages and keeps $20 in profits.
• Firm 3 sells $240 of cars to households. It pays for its inputs (from Firm 1 and Firm 2); keeps one third of its remaining earnings as profits,and pays two thirds in wages. Let’s calculate GDP various ways.
(a) What is the final value of goods and services?
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Solution: Economics - Consider an economy with three firms