Consider the Case of a Hypothetical Economy That Has No

question 132

Essay

Consider the case of a hypothetical economy that has no government or foreign trade.This economy produces one final product,books.Moreover,there are only two stages of production,writing by authors and publishing by a single publishing company,Inco.In 2010,Inco produced $4 million worth of books,and consumers purchased $3 million of those books.
(A)In 2010,for this economy,how much were C and I? How much was GDP? In 2010,Inco paid $500,000 to its workers,$200,000 in interest to its creditors,$300,000 for rent,and $2 million to its authors.
(B)How much were Inco's profits in 2010?
(C)How much value added was produced by the authors in 2010? How much value added was produced by Inco? What was the total value added produced in the economy that year?

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Definitions:

Initial Supply Curve

The starting position of the supply curve before any changes in market conditions or external factors.

Organization of Petroleum Exporting Countries

An intergovernmental organization of 13 oil-producing countries that works to coordinate and unify the petroleum policies of its member countries.

Chocolate-Covered Peanuts

A snack consisting of peanuts coated in chocolate, combining the crunchy texture of nuts with the sweetness of chocolate.

Shortage

A situation in which demand for a good or service exceeds its supply in a market, often leading to higher prices.