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Homework answers / question archive / Estimation of the GDP using Income Approach
Estimation of the GDP using Income Approach.
Example: There is a shoe factory in Kazakhstan that produces shoes using factors of production such as labour, machinery and leather. Based on the given data, calculate the GDP of this production unit using the income approach.
Sales Revenue
30 (Million USD)
Expenses
18 (Million USD)
Wages
10
Cost of production
8
Net Income
12 Million USD
GDP using income approach=
Hint: Two main factors of production earned income, one is Labour (L) and another one is Capital (K).
The Labour (L) earned income in terms of wages and owner of the factor earned income in terms of Capital (K)/ Net income.