Question

Ryan is a Canadian resident who lives with his family in Victoria, Canada, but works for a small donut cafe in Seattle, U.S., where he commutes every day. On a typical day, Ryan produces 600 donuts that sell for $ 1 apiece. Of the revenue from selling the donuts, Ryan is paid $ 390 per day. The remaining $ 210 revenue is distributed as follows: $ 52.5 pays for inputs such as water, flour, sugar, butter, and energy, $ 105 is rent for using the facilities and interest for an initial loan to start the business, and $ 52.5 goes to salary to the manager and profit to the owner of the café.

a)      How much is the increase in U.S. GDP generated by the production of the 600 donuts?

b)      How much is the increase in U.S. GNP generated by the production of the 600 donuts?

c)   How much is the increase in Canada’s GDP generated by the production of the 600 donuts?

d)   How much is the increase in Canada’s GNP generated by the production of the 600 donuts?

Answer 1

Solution : Given, Ryan produces = 6oo donuts each donut selle = $1 a piece Ryan paid = 8390 per day of revenue = 8210 water = $52.5 flour, sugar, butter, energy = $105 Salary = 852.5 @ Tn craße in us GDP generated by production of boo donuts : The Gop of USA will increase by (8600] because - Gop is sum of values of all goods and services produced within the boundaries of the country. (Gop = 8600 (6) Increase in us GNP generated by production of boo donuts

GNP is gross national product (ie the amount of goods and services produced within the country less than the net factor services from abroad. > $600 – 390 : GNP (820) @ Increase in canadas GPP generated by boo donuts: » The Gop of Canada will increase by D because the donuts Production is taking place in USA & generated by Goo donuts: Increase in GNP of canada - The GNP will increase by (8390 because the income earned by Ryan will be added af NF1 ... GNP = (8990]