2. Prime Minister Derpington wants to know about the difference between different macro variables like nominal GDP, real GDP, and how inflation links the two together. She hasn't quite figured out what the difference is yet, and she really needs your help. The following table shows the quantity (in millions) of each good sold as well as the price (in the Derpistani currency, the "Bone" B). Table 1: Derpistan's Economy 2016 2018 2016 2017 2017 2018 Price Quantity Good Price Quantity Price Quantity Friskies Cat Food 12 15 14 17 15 15 50 Cat Litter 3 51 7 52 Mango Salsa Mr. Bill Stuffed Toys Squirt Bottles 80 80 80 10 12 13 15 12 18 19 19 15 10 Canned Tuna 11 10 Insulin 10 66 12 66 13 56 Catnip 12 29 (c) Prime Minister Derpington is worried that inflation might be a problem in Chirpistan. Using the GDP deflator, what was inflation in 2017? (d) Suppose that Chirpistan's Kongress votes to ban catnip because of its intoxicating effects on some of the Chirpistani citizens. How much different is GDP in 2018 when catnip is illegal?

2. Prime Minister Derpington wants to know about the difference between different macro variables like nominal GDP, real GDP, and how inflation links the two together. She hasn't quite figured out what the difference is yet, and she really needs your help. The following table shows the quantity (in millions) of each good sold as well as the price (in the Derpistani currency, the "Bone" B). Table 1: Derpistan's Economy 2016 2018 2016 2017 2017 2018 Price Quantity Good Price Quantity Price Quantity Friskies Cat Food 12 15 14 17 15 15 50 Cat Litter 3 51 7 52 Mango Salsa Mr. Bill Stuffed Toys Squirt Bottles 80 80 80 10 12 13 15 12 18 19 19 15 10 Canned Tuna 11 10 Insulin 10 66 12 66 13 56 Catnip 12 29 (c) Prime Minister Derpington is worried that inflation might be a problem in Chirpistan. Using the GDP deflator, what was inflation in 2017? (d) Suppose that Chirpistan's Kongress votes to ban catnip because of its intoxicating effects on some of the Chirpistani citizens. How much different is GDP in 2018 when catnip is illegal?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.

Question

2) C&D

2. Prime Minister Derpington wants to know about the difference between different
macro variables like nominal GDP, real GDP, and how inflation links the two together. She
hasn't quite figured out what the difference is yet, and she really needs your help. The
following table shows the quantity (in millions) of each good sold as well as the price (in the
Derpistani currency, the "Bone" B).
Table 1: Derpistan's Economy
2016
2018
2016
2017
2017
2018
Price Quantity
Good
Price
Quantity
Price
Quantity
Friskies Cat Food
12
15
14
17
15
15
50
Cat Litter
3
51
7
52
Mango Salsa
Mr. Bill Stuffed Toys
Squirt Bottles
80
80
80
10
12
13
15
12
18
19
19
15
10
Canned Tuna
11
10
Insulin
10
66
12
66
13
56
Catnip
12
29

(c) Prime Minister Derpington is worried that inflation might be a problem
in Chirpistan. Using the GDP deflator, what was inflation in 2017?
(d) Suppose that Chirpistan's Kongress votes to ban catnip because of its
intoxicating effects on some of the Chirpistani citizens. How much different is GDP
in 2018 when catnip is illegal?

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