Suppose a closed economy Chili and chili sauce are the only

Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.

How much is the after-tax income of the consumers

A) $30,000

B) $32,000

C) $35,000

D) $37,000

Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.

How much is the expenditure on consumption

$50,000

$60,000

$80,000

$70,000

Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.

How much is the total spending on all final goods and services produced,

A) $62,000

C) $72,000

B) $70,000

D) $82,000

Solution

(1) The after-tax income of the consumers is

The chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.

The government spends $12,000 to hire consumers to operate the government.

The government collects $2,000 of tax from consumers So the after tax income of consumers is =$15000+$10000+$12000-$2000

=$35000

(2)  the expenditure on consumption is =

$20,000 of chilies and  $50,000 chili sauce are bought by consumers

So the total expenditure is $70000.

(3) The total spending on all final goods and services produced is=

$20,000 of chilies and chili sauce  $50,000 are bought by consumers,   government spends $12,000 to hire consumers to operate the government so the total expenditure is

$82000