2 In the country of Kwaki people produce canoes fish for sal

2) In the country of Kwaki, people produce canoes, fish for salmon, and grow corn. In one year they produced 5000 canoes using labor and natural materials only, but sold only 4500 at $1250 each, as the economy entered a recession. The cost of producing each canoe was $1000. They fished $30 million worth of salmon. They used $3 million of the salmon as fertilizer for corn. They grew and ate $65 million of corn. What was Kwaki\'s GDP for the year? (10 points)

Solution

Cost of inventory = $ 1000 x 500 canoes = $ 0.5 million

Value of sales = 4500 x 1250 = $ 5.625 million

Final good = 30 million - 3 million used as intermediary = $ 27 million

Corn worth $ 65 million was grown.

So, TotalGDP (in millions) was $ 0.5 + $ 5.625 + $ 27 + $ 65 = $ 98.125 million