Question

One day, Barry the Barber, Inc., collects $450 for haircuts. Over this day, his equipment depreciates in value by $30. Of the remaining $420, Barry sends $40 to the government in sales taxes, takes home $270 in wages, and retains $110 in his business to add new equipment in the future. From the $270 that Barry takes home, he pays $80 in income taxes.

Based on this information, complete the following table by computing Barry’s contribution to the measures of income listed.

Measure of Income	Barry’s Contribution
	(Dollars)
Gross Domestic Product
Net National Product
National Income
Personal Income
Disposable Personal Income

Answer 1

A) Gross domestic product:- The $450 that the firm collects for haircuts is the consumption of its customers

B) Contribution to net national product: - Contribution to GDP - Depreciation

                                          = 450 - 30 = $420

C) National income: - Is the total income earned by a nations residents. Thus contribution to national income is the same as contribution to net product, which is $420                                                                                                                      

D) Personal Income = National income - Retained earning                                                                                                                    = 420 - 110 – 40 = $270

E) Disposable Personal income = Personal income - personal tax

=270 - 80 = $190