A Flour Mill Produces $1000 Worth of Flour, of Which

Essay

A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1500 worth of bread and sells all of it to consumers. The three companies pay wages as follows: the mill pays $400, the water supplier pays $200, and the bakery pays $200. There are no other costs of production.
a. Calculate GDP based on the value of production.
b. Calculate profits to the owners of each of the three companies (profit = revenue minus costs).
c. Calculate GDP based on income.