Suppose that in 1984 the total output in a single-good economy was 7,000 buckets of chicken. Also assume that in 1984 each bucke
t of chicken was priced at $15. Finally, assume that in 2005 the price per bucket of chicken was $20 and that 22,000 buckets were produced. a. What is the GDP price index for 1984, using 2005 as the base year?
b. By what percentage did the price level, as measured by this index, rise between 1984 and 2005? ...percent.
c. What were the amounts of real GDP in 1984 and 2005?
A) What is the GDP price index for 1984, using 2005 as the base year?
the GDP price index using 2005 as base year = [($15 / $20) x 100] = 75
B) By what percentage did the price level, as measured by this index, rise between 1984 and 2005? ...percent.
the price level increased by: [(100 - 75) / 75] x 100 = 33.33%
C) What were the amounts of real GDP in 1984 and 2005?
In 1984, real GDP = $20 x 7,000 buckets = $140,000 or we can also use another method = ($15 x 7,000) / 0.75 = $105,000 / 0.75 = $140,000. The answer using both methods should be the same.
In 2005, real GDP = $20 x 22,000 buckets = $440,000
according to <span>IX Boston Consulting Group Model, a star will became a<em> cash cow</em> </span><span>if it still has the largest market share under this circumstances. This means that the company still making enough cash for its employees and still enjoy a pretty high-profit margin.
In order to attract more customers to your store and sell larger quantitative, you must sell at a price below the competition, not above.
Rational customers should purchase at the lowest possible price, that is the basic concept behind the law of supply and demand. A lower price should result in a higher quantity demanded.
It makes it easier to compare prices across Europe - the Euro is the common curriency across 19 countries, but prices in those countries are far from being the same. For example, Germany is a lot more expensive than Greece (although a lot wealthier too), and Greek people can easily find out that the same product in Germany costs more euros than in Greece.
It makes Europe an optimal currency area - in the Eurozone, economic efficiency is now higher because resources can be allocated across different countries thanks to the fact that prices can be compared in the region.
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