Reference no: EM131093092

In class we discussed the calculation of GDP in the Coconut/Restaurant economy. In recitation on March 18, your TA discussed the calculation of GDP in the Jimmy Buffett economy. This question is similar to these (and is from a past midterm). It will give you further practice in doing these calculations. A chemical company sells $1,000 worth of MiraclClean to a well known retailer, T*rg*t. The chemical company pays rents of $200 and pays wages $500 to workers. The owner of the company keeps the rest as profit. A pet food producer sells $2,000 worth of WondaChow to T*rg*tTM and exports $800 to dog-loving inhabitants of Peladon. The pet food producer pays rents of $600 and $1,400 to workers. He keeps the rest as profit. T*rg*tTM buys $1,000 worth of MiraclClean and $2,000 worth of WondaChow. It also imports 800 decorative mugs from Peladon at a cost of $800. It sells all the MiraclClean and WondaChow for $4,000 and half the mugs at a price of $2 a mug to customers. It spends $1,000 on labor and rest of the revenue is distributed to shareholders. Unsold mugs are kept by T*rg*tTM for sale in a later period. (a) Use the production approach method to calculate GDP. (b)What is total consumption, total investment, and total net exports?