Consider an economy that produces only two goods: fresh apricots and dried apricots. In this economy, the technology of producing dried apricots is to place fresh apricots on special racks and allow them to dry in the sun. Fannie's Farms is the only company that grows fresh apricots, while Darryl's Dried Victuals is the only producer of dried apricots. Fannie's sells some of its apricots directly to consumers for consumption. The relevant revenue and cost information for each of the two firms in the economy is given below:
Darryl's
Revenue from selling dried apricots: $2,300,000
Cost of buying fresh apricots from Fannie's: 1,200,000
Interest on funds borrowed to buy drying racks: 250,000
Wages paid to employees 600,000
Taxes 100,000
Fannie's
Revenue from selling fresh apricots: $2,000,000
Rent on land (including apricot trees) 300,000
Wages to employees 1,200,000
Taxes 200,000
Calculate nominal GDP using the expenditure approach and the income approach and show that they give the same answer.