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In the Land of Milk and Honey, they produce two goods: Milk and Honey. In 2014, milk cost $2 a gallon and they produced 10 gallons. Honey cost $1 a pint and they produced 20 pints. In 2015, milk cost $2 a gallon and they produced 12 gallons. Honey cost $1 a pint and they produced 24 pints. In 2016, milk cost $2.50 a gallon and they produced 12 gallons. Honey cost $1.25 a pint and they produced 24 pints. The base year is 2015. Calculate real GDP in 2014.
a. $20.
b. $40.
c. $48.
d. $60.
e. $80.
f. $100.
g. $125.

Respuesta :

anthougo

Answer:

Land of Milk and Honey

The real GDP in 2014 is:

= b. $40.

Explanation:

a) Data and Calculations:

                                         Milk           Honey            Total GDP

Cost per gallon in 2014   $2                 $1

Quantity produced           10                 20

Total production value  $20 ($2*10)  $20 ($1*20)    $40 ($20 + $20)

Cost per gallon in 2015   $2                 $1

Quantity produced           12                 24

Total production value  $24 ($2*12)  $24 ($1*24)    $48 ($24+ $24)

Cost per gallon in 2016   $2.50              $1.25

Quantity produced           12                   24

Total production value  $30 ($2.50*12)  $30 ($1.25*24) $60 ($30 + $30)

The real GDP in 2014 is the calculated value of $40.  Using 2015 as the base year, there is no inflation since the unit prices of milk and honey remained the same in both years.

marvineetesh3

The real GDP in 2014 would be $40.

What is GDP?

The full form of GDP is gross domestic product. In simple words, it means the total of all value added produced in an economy.

The value added intends the value of goods and services that have been produced minus the value of the goods and services wanted to produce them.

Computation of the real GDP:

From the given information, data and calculations are given in the image below:

Hence, The real GDP of the year 2014 would be $40. Taking 2015 as the base year, there is no inflation since the unit prices of milk and honey stay on the same in both years.

Therefore, option B is correct.

Learn more about GDP, refer:

https://brainly.com/question/4131508

 

   

Ver imagen marvineetesh3

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