Calculate the income received by each household

Reference no: EM133203889 , Length: 1 Pages

Assignment:

Consider the following closed economy. There are three firms (F1 F2 and F3) and two households (HA and HB). Household HA has the property of all the 3 firms. Three workers form household HB. Worker no.1 of HB works in firm F1, worker no.2 in firm F2 and worker no.3 in Firm F3. Firm F1 is an agricultural firm and produces sugar for 90 monetary units (m.u.). Firm F2 uses all this sugar to produce marmalade for 200 m.u. Finally firm F3 buys 100 m.u. of the marmalade to put in nice glasses and sell all to the final consumers for a value of 220 m.u. Each worker receives a wage of 50 m.u. Both households spend all the income they earn to buy either raw marmalade or marmalade in glasses.

Q1. Calculate the added value in each firm and the GDP of this economy.

Q2. Calculate the income received by each household and the total expenditure in goods in this economy.

Q3. Verify that in this economy the equation Y=C+I. (G and NX are zero obviously)

Reference no: EM133203889

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