Question

Assume an economy where consumers buy all goods from an online store that allows trading firms to sell goods and consumers to sell second-hand goods. All sellers pay 30% of their sales to the store as hosting fees, of which 5% go 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 second-hand 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 sales 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 revenue to truck drivers as wages. Calculate the economies GDP for the year using

i. the product approach

ii. the expenditure approach

iii. the income approach

Answer 1