Question

econ George and John, stranded on an island, use clamshells for money. Last year George caught 300 fish and 5 wild boars. John grew 200 bunches of bananas. In the two-person economy that George and John set up, fish sell for 1 clamshell each, boars sell for 10 clamshells each, and bananas go for 5 clamshells per bunch. George paid John a total of 30 clamshells for helping him to dig bait for fishing, and he also purchased five of John’s mature banana trees for 30 clamshells each. What is the GDP of George’s and John’s island in terms of clamshells?

Answer 1

Answer:

The GDP of the island is  1,350 clam shells.

Explanation:

George and John produce fish, boars, and bananas in their two-person economy. Fish sell for 1 clamshell each, boars sell for 10 clamshells each, and bananas go for 5 clamshells per bunch.

In this economy, the GDP will be the value of final goods and services produced. Intermediate goods will not be included.  

Digging bait for fishing and the purchase of banana trees will not be included in the GDP.  

The GDP of the island in terms of clamshells will be  

= $(300\times 1) + (5\times10)+(200\times5)$

= 300 + 50 + 1,000

= 1,350 clam shells