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M1s08ans - Economics 502.02 Professor McCaffertv S...

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Professor S. McCaffertv Economics 502.02 Midterm Examination I Spring,2008 Name: Aosvi€ a5 Directions: Answer all questions. l. Consider an economy that consists of a coconut grower and a restaurant. There is no government. The coconut grower produces and sells $1000 worth of coconuts. The grower has no raw material inputs. The coconut producer pays $600 in wages to its employees.The coconut producer has no other currentexpenses. The restaurant produces and sells $3000 worth of meals. The restaurant buys $500 worth of coconuts as a raw material for producing the meals. The restaurant pays $2000 to its workers. The restaurant has no other current expenses. a.) Fill out the provided production statements for the two businesses. Indicate the gross output ofeach firm and the value added by eachfi o lrTn an value each trrm. (4 nts Gross Production Statement (Coconuts) Costs Receipts lDc> ts, La oa *rloo Q, (.>cr^rts b ,oo, Gross Value 6 , of Inputs I Oa'c-' Gross Value ? of Output IAU' Coconut Producer's Value Added Costs Receipts $, U,Pt; A+oo .gt Loc r*&sulote Value Added O t, OOV from Inputs Value Added T to outout ' L co O
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Gross Production Statement (Restaurant) Costs Receipts (oC6*'^$ .t$o ('GhJ&*a,4-) ta)a^eq oloDD p.*;5 s5z-" i V\zels ' 3 c)v Gross Value oflnputs SDa) Gross Value L ;ilil-- s3aaa Restaurant's Value Added Costs Receipts d >oo, n{o. 0-1. a-"AS .- (n>ca*u-ta Aa{aa Value Added "1 cf,r-. from Inputs <^' \) t-/ L'' Value Added $.^. - , to Output o() a )
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3 b.) Determine GDP in this economy using the product approach. (2 points) A; zf.>> .= A 6. 4 --- (a oe, 4 ')an, ( -og."\ tt,,-, + -={DD L,Dar--t.l,z ?2 GIP-- G$?'u&To"f,c' + + Dt'n-r+^," Wi-fufiL, f z-e.8 =352i 6 6l ? --J9.ra- 6A&e$ .k,*,^ c-b ( = '.^-d; + ti rs-'( NLetu'T k* v+aaoJ IbaD + 35a-2 ..-= Domestic consumers in this economy buy $500 worthof coconuts to eat at home and spend $3000 on restaurant meals. The restaurant also buys a new oven for $500 from a foreign producer of restaurant supplies. The restaurant plans to use this oven for many years. c.) Determine GDf in this economy using the expenditure approach. (4 points) ? ^1 "{"L><vu-'y'-a '*' | $aoo we-zAs g t u{ro /c;*) 3;, (ia (ouo^-PfD 't- GD?; (-rf,+ 6+ Pf = "3I>a-+- sbz Domestic residents receive all of the profits from domestic productionof coconuts and restaurant meals. Domesticresidents also receive $500 in dividend income from the ownership of shares of stock in foreign companies. d.) Determine GNP in this economy using the income approach. Reconcile any different between GNP and GDP in this economy. (4 points) enR ' *1" it^-r-o--,--t- .+ Pr .,A ,L L"r"-- 4 n- *.tooo ^ n5-Dz = '-=-
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4 2. Consider the following statistics for a hypothetical country. This country's only products are Food, Clothing, and Entertainment.
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