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There are three firms in an economy: A, B, and C. Firm A buys $400 worth of goods from firm B and $240 worth of goods from firm C, and produces 220 units of output, which it sells at $7 per unit. Firm B buys $130 worth of goods from firm A and $170 worth of goods from firm C, and produces 450 units of output, which it sells at $4 per unit. Firm C buys $200 worth of goods from firm A and $100 worth of goods from firm B. It produces output worth $1,200. All other products are sold to consumers.
Instructions: Round your answers to the nearest whole number.
a. Calculate GDP.
$.
b. If a value-added tax (a tax on the total value added by each firm) of 14 percent is introduced, how much revenue will the government get?
c. How much would government get if it introduced an income tax of 14 percent?
d. How much would government get if it introduced a sales tax of 14 percent on final output?
$
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