PSU ECON 104 Homework 2 - Points Awarded 100.00 Points...

Points Awarded 100.00
Points Missed 0.00
Percentage 100%
1.
Part 1: 32 questions at 3 points each for a total of 96 points
FOR FILL-IN-THE-BLANK questions: If your answer is in decimal form, round to 2 decimal places. For
example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if your answer is 1.415, enter it into
the fill-in-the-blank as 1.42. If there are no decimals in your answer, you will simply enter the number; so if your
answer is 2, enter 2 with no decimals. Do not enter any extra spaces, do not enter commas or $ or % symbols.
Use the information below to answer questions 1-6
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 Dried Victuals
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 Farms
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

Darryl's profit from selling dried apricots is:
Feedback: 2,300,000-1,200,000-250,000-600,000-100,000 = 150,000
Table for Individual Question Feedback
Points Earned: 3.0/3.0
2.
Fannie’s profit from selling fresh apricots is:
Feedback: 2,000,000-300,000-1,200,000-200,000= 300,000
Table for Individual Question Feedback
Points Earned: 3.0/3.0
3.
Use the income approach to calculate nominal GDP. Fill in the blanks in the table below. Enter numbers with
no commas, no dollar signs and no decimals. For example, if your answer is $12,000 you would enter
12000 into the appropriate box.
a. Total wages
1800000
b. Interest
250000
c. Rent
300000
d.Total profit*
450000

*hint: get total profit by adding your answers for #1 and #2!
Table for Individual Question Feedback
Points Earned: 3.0/3.0