Question

Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 150 DVDs were sold at $10 each and 10 DVD players were sold at $60 each. Real GDP for this year using last year as the base year is

Answer 1

Answer:

$4,000

Explanation:

Given that,

Last year:

DVDs sold = 10

Selling price of each DVD = $20

DVD players sold = 5

Selling price of each DVD player = $100

This year:

DVDs sold = 150

Selling price of each DVD = $10

DVD players sold = 10

Selling price of each DVD player = $60

Real GDP:

= (No. of DVDs sold this year × Selling price of each DVD last year) + (No. of DVD players sold this year × Selling price of each DVD player last year)

= (150 × $20) + (10 × $100 )

= 3,000 + 1,000

= $4,000.