Answer to Question #135744 in Microeconomics for Cale

Question

Q.3.2 Calculate the value of net national product (NNI) at market prices.

Q.3.3 Calculate the value of net national income (NNI) at factor cost.

Answer 1

solution

(A)

net national product at market price can be calculated by formula

NNP_MP=GDP_MP - DEP + NFIA

GDP_MP=PV + GOVT + NE + NDCF

where GDP_MP= gross domestic product at market price

DEP=depreciation

NFIA=net factor income from abroad

PV=consumption expenditure of private sector

GOVT= consumption expenditure of government sector

NE=net export

NDCF=net domestic capital formation

(B) net national product at can be calculated by formula as

NNI_FC= NNP_MP - indirect taxes

NNI_FC =net national income at factor cost

NNP_MP=net national product at market price