An economy has 80 workers producing two goods: bananas and tractors. Each worker can produce either...

An economy has 80 workers producing two goods: bananas and tractors. Each worker can produce either 5 tons of bananas or 2 tractors in a year. Currently, 60 workers produce bananas, and the rest produce tractors. The price of a ton of bananas is $200, and that of a tractor is $500. Each worker earns $600 in wages a year. The government sector buys 15 tractors a year. There is no depreciation or ROW in this economy. Assume that firms distribute ALL of their profits to households as dividends.

Calculate the level of consumption (C), investment (I), government expenditures (G), and national product (NP). Show your work!

Expert Solution

Rahul Sunny answered 2 years ago

An economy has 80 workers producing two goods: bananas and tractors. Each worker can produce either...

An economy has 80 workers producing two goods: bananas and tractors. Each worker can produce either 5 tons of bananas or 2 tractors in a year. Currently, 60 workers produce bananas, and the rest produce tractors. The price of a ton of bananas is $200, and that of a tractor is $500. Each worker earns $600 in wages a year. The government sector buys 15 tractors a year. There is no depreciation or ROW in this economy. Assume that firms...

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An economy has 80 workers producing two goods: bananas and tractors. Each worker can produce either...

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