MGEA06H3 Chapter Notes -Market Basket

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA06H3
• Professor: Iris Au

Document Summary

This question concerns the paradox of thrift; what is true for an individual that saving makes you better off is not always true for the economy as a whole. When an individual saves, that person adds to his or her wealth, providing for higher consumption in the future. However, if everyone saves, firms will not sell as much and will lay off workers. Individuals find that their incomes fall as a result. Question 2: chapter 7, problems #4: to calculate gdp as the value added in production, we need to sum all value added (value of output less input costs) for each company. Value added in the bread company is ; in the cheese company, ; and in the pizza company, ( ). Spending on final goods and services is : to calculate gdp as factor income, we need to sum factor income (wages and profits) for each firm.