Question

Consider an economy with two firms. Firm A produces orange and Firm B produces orange juice. In a given year, Firm A produces 10 million pounds oranges, sells 4 million pounds of these oranges to Firm B, sells 3 million pounds oranges to domestic consumers, and exports 3 million pounds oranges. Each pound of orange is sold at $1. Firm A pays $6 million in wages to domestic workers and $1 million tax to the government. Firm B produces 4 million boxes of orange juice. In addition, they import 2 million boxes of orange juice. The import price of orange juice is $2 per box. 5 million boxes of orange juice are sold to domestic consumers at $3 per box, and the remaining 1 million boxes of orange juice is stored in the inventory. Firm B pays $5 million in wages to the domestic workers, and pays $2 million in taxes to the government. The government provides education for the domestic consumers, and the cost of the educational services is just the wages paid to the teachers, which is $4 million. Finish the following tasks and briefly show the steps.

1.1 Calculate the GDP using product approach.

1.2 Calculate the GDP using expenditure approach.

1.3 Calculate the GDP using income approach.

Answer 1