Answered: 2013 2018 Product Quantity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

	2013		2018
Product	Quantity	Price	Quantity	Price
Pizzas	100	$10	120	$12
Haircuts	50	15	45	20
Backpacks	200	40	210	45

Suppose that a very simple economy produces three goods: pizzas, haircuts, and backpacks. Suppose that the quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.

Use the information to compute the real GDP in the year 2013 and 2018. Calculate the real GDP in 2018 assuming the base year is 2013.

Expert Solution

Step 1

Real GDP in the year 2013= $p r i c e o f p i z z a \times q u a n t i t y o f p i z z a + p r i c e o f h a i r c u t s \times q u a n t i t y o f h a i r c u t s + p r i c e o f b a c k p a c k s \times q u a n t i t y o f h a i r c u t s$

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