Answer to Question #167552 in Macroeconomics for Khadija

Question

Suppose there are only three firms in an economy. Firm A grows crops and extracts minerals from its land with no inputs from other firms. Its sales are $200million annually, half of which goes to households and half to firms B and C in equal amounts. Firm B buys inputs from A and sells its entire output of $400million to Firm C. Firm C buys inputs from A and B and sells its $900million output directly to consumers (though 20% of this is overseas). What is GDP at basic prices? If there is only one tax – VAT at 10% - what is GDP at market prices

Answer 1

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