Reference no: EM13377991

Consider an economy that produces only two goods: fresh apricots and dried apricots. In this economy, the technology of producing dried apricots is to place fresh apricots on special racks and allow them to dry in the sun. Fannie's Farms is the only company that grows fresh apricots, while Darryl's Dried Victuals is the only producer of dried apricots. Fannie's sells some of its apricots directly to consumers for consumption. The relevant revenue and cost information for each of the two firms in the economy is given below:

Darryl's

Revenue from selling dried apricots:                       $2,300,000

Cost of buying fresh apricots from Fannie's:              1,200,000

Interest on funds borrowed to buy drying racks:          250,000

Wages paid to employees                                             600,000

Taxes                                                                             100,000

Fannie's

Revenue from selling fresh apricots:                         $2,000,000

Rent on land (including apricot trees)                            300,000

Wages to employees                                                  1,200,000

Taxes                                                                             200,000

Calculate nominal GDP using the expenditure approach and the income approach and show that they give the same answer.