Question

n 2018, Riceland economy produced rice and rice cakes. The rice farm imported 10 lbs of rice at $0.5 per pound, seeded this rice and harvested 100 lbs of rice, the market price for which was $1.00. Out of these 100 lbs, the farm stored 10lbs to plant rice next year, sold 60 lbs to consumers (who cooked and ate it at home), and and sold 30 lbs to the bakery. The bakery made 600 rice cakes from this rice and sold them to the consumers at $0.10 per cake.

1. The value-added of the rice farm is [a].
The value-added of the bakery is [b].
Thus, 2018 Riceland GDP is [c].

2. List the values of the expenditure components of the GDP:
consumption = [a]
investment / invetories = [b]
government expenses = [c]
net export = [d]

3. Consider the same Riceland economy. Suppose that all the farm employees earn $40 in wages and all the bakery employees earn $30 in wages. There is no government in this economy, so there are no taxes. Thus, the total profits of the farm and the bakery (put together) are [a]

Answer 1