Question

An economy produces computer chips and fish. In 2014, one pound of fish costs $10, a computer chip costs $10, and the economy produces 10 pounds of fish and 10 computer chips. In 2015, when the economy produces 5 pounds of fish and 20 computer chips, one pound of fish costs $20 and a computer chip costs $5. Real GDP in 2015 (at 2014 prices) was _____ dollars.

Answer 1

Answer:

Real GDP (2014 price) = $ 250

Explanation:

GDP is the total value (PxQ) of goods & services, produced by an economy during a period of time. Real GDP is the value at constant base year prices.

Given [2015] : Fish Quantity =  5 , Computer Chip Quantity =  20

Base Year [2014] price : Fish = $10 , Computer Chip = $10

2015 Real GDP at 2014 base year price = Price 2014 x Quantity 2015

= (Fish PXQ) + (Computer Chip PXQ)

= (10 x 5) + (10 x 20)

= 50 + 200

= $ 250