Assume an economy where consumers buy
all goods from an online store that allows trading
firms to sell goods and consumers to sell secondhand goods. All sellers pay 30% of their sales to
the store as hosting fees, of which 5% goes to technicians as wages and another 5% goes to a logistics firm for delivery of the goods to consumers. In
a given year, Trading Firm A’s sales revenue is $1
million, and Trading Firm B, which sells secondhand goods, receives sales revenue of $0.5 million.
Trading firm A does not employ any workers to
produce or market the goods but pays 40% of its
sales revenue to import the goods. Trading Firm B’s
revenue for the sale of second-hand goods covers
the hosting fees and the cost of goods originally
purchased in the past. The logistics firm pays 80%
of the sales revenues to truck drivers as wages. Calculate the economy’s GDP for the year using (a) the
product approach, (b) the expenditure approach,
and (c) the income approach.