The economy of Zambia has two sectors, agriculture and industry. Consumers are the end users of the final output. The agriculture sector produces maize worth K16000 and milk worth K16000. Maize worth K4000 as well as milk worth K6000 is sold to consumers for direct consumption, and maize worth K12000 and milk worth K10000 is sold to the industry as intermediate inputs in the production of mealie meal and butter respectively. The industry uses this maize to produce mealie meal worth K32000 and uses milk to produce butter worth K18000 which are sold to consumers for final consumption. In addition, the agriculture sector pays wages worth K20000, rent worth K4000 and earns profit equal to K8000. The industry sector pays wages worth K16000, rent worth K6000 and earns a profit of K6000. a) Calculate GDP for the above economy using the three approaches: product approach, income approach, and expenditure approach. b) Peter was bragging to his wife that his country, Zambia, is doing better than his wife’s country, Malawi. This is because the value of production at current prices in Zambia last year was k20000 more than that for Malawi. Is Peter justified in his bragging? Explain
The economy of Zambia has two sectors, agriculture and industry. Consumers are the end users of
the final output. The agriculture sector produces maize worth K16000 and milk worth K16000.
Maize worth K4000 as well as milk worth K6000 is sold to consumers for direct consumption, and
maize worth K12000 and milk worth K10000 is sold to the industry as intermediate inputs in the
production of mealie meal and butter respectively. The industry uses this maize to produce mealie
meal worth K32000 and uses milk to produce butter worth K18000 which are sold to consumers
for final consumption. In addition, the agriculture sector pays wages worth K20000, rent worth
K4000 and earns profit equal to K8000. The industry sector pays wages worth K16000, rent worth
K6000 and earns a profit of K6000.
a) Calculate
approach, and expenditure approach.
b) Peter was bragging to his wife that his country, Zambia, is doing better than his wife’s country,
Malawi. This is because the value of production at current prices in Zambia last year was k20000
more than that for Malawi. Is Peter justified in his bragging? Explain.
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