A. In which year was water the most expensive in real terms? Show workb. What was real wage fir jakku's minimum wage of $8.25 in 2014 BreadWaterPlowsMetalPriceQuantityPriceQuantityPriceQuantityPriceQuantity$438001000 $1501100 $2001100 $2001100 $2102011$2100$1602012$3110$170$44875$46$492013$3120$1709002014$5120$240934

Answered: Bread Water Plows Metal Quantity Price…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Related questions

Question

A. In which year was water the most expensive in real terms? Show work

b. What was real wage fir jakku's minimum wage of $8.25 in 2014

Bread
Water
Plows
Metal
Price
Quantity
Price
Quantity
Price
Quantity
Price
Quantity
$43
800
1000 $150
1100 $200
1100 $200
1100 $210
2011
$2
100
$1
60
2012
$3
110
$1
70
$44
875
$46
$49
2013
$3
120
$1
70
900
2014
$5
120
$2
40
934

Expert Solution

Step 1

We need to calculate real value of water in each year to determine in which year it is most expensive. For this we need price index / GDP deflator of each year .

Real value at time t = $\frac{N o m i n a l v a l u e a t t i m e t}{P r i c e I n d e x a t t i m e t} \times 100$

GDP deflator is Price Index .

GDP deflator $= \frac{N o m i n a l G D P}{R e a l G D P} \times 100$

Nominal GDP is current quantities multiplied with their respective current year prices . Real GDP is current quantities multiplied with their respective base year prices .

Base year - 2013 ( Given)

Real GDP is current quantities multiplied with their respective base year prices .

For 2011,

Real GDP = Price of bread in 2013*Quantity of bread in 2011 + Price of water in 2013*Quantity of water in 2011 + Price of plows in 2013*Quantity of plows in 2011

Real GDP_{2011= $= $ 3 \times 100 + $ 1 \times 1000 + $ 200 \times 60 = $ 300 + $ 1000 + $ 12000 = $ 13300$}

For 2013,

Real GDP = Price of bread in 2013*Quantity of bread in 2013 + Price of water in 2013*Quantity of water in 2013 + Price of plows in 2013*Quantity of plows in 2013

Real GDP ₂₀₁₃= $= $ 3 \times 120 + $ 1 \times 1100 + $ 200 \times 70 = $ 360 + $ 1100 + $ 14000 = $ 15460$

For 2014,

Real GDP = Price of bread in 2013*Quantity of bread in 2014 + Price of water in 2013*Quantity of water in 2014 + Price of plows in 2013*Quantity of plows in 2014

Real GDP₂₀₁₄ $= $ 3 \times 120 + $ 1 \times 1100 + $ 200 \times 40 = $ 360 + $ 1100 + $ 8000 = $ 9460$

For 2012,

Real GDP = Price of bread in 2013*Quantity of bread in 2012 + Price of water in 2013*Quantity of water in 2012 + Price of plows in 2013*Quantity of plows in 2012

Real GDP₂₀₁₂ $= $ 3 \times 110 + $ 1 \times 110 + $ 200 \times 70 = $ 330 + $ 1100 + $ 14000 = $ 15430$

Nominal GDP is current year quantity multiplied with current year price.

For 2011,

Nominal GDP = Price of bread in 2011*Quantity of bread in 2011 + Price of water in 2011*Quantity of water in 2011 + Price of plows in 2011*Quantity of plows in 2011

Nominal GDP_{2011= $= $ 2 \times 100 + $ 1 \times 1000 + $ 150 \times 60 = $ 200 + $ 1000 + $ 9000 = $ 10200$}

For 2014,

Nominal GDP = Price of bread in 2014*Quantity of bread in 2014 + Price of water in 2014*Quantity of water in 2014 + Price of plows in 2014*Quantity of plows in 2014

Nominal GDP₂₀₁₄ _{$= $ 5 \times 120 + $ 2 \times 1100 + $ 210 \times 40 = $ 600 + $ 2200 + $ 8400 = $ 11200$}

For 2012,

Nominal GDP = Price of bread in 2012*Quantity of bread in 2012 + Price of water in 2012*Quantity of water in 2012 + Price of plows in 2012*Quantity of plows in 2012.

Nominal GDP₂₀₁₂ $= $ 3 \times 110 + $ 1 \times 1100 + $ 200 \times 700 = $ 330 + $ 1100 + $ 14000 = $ 15430$

For 2013,

Nominal GDP = Price of bread in 2013*Quantity of bread in 2013 + Price of water in 2013*Quantity of water in 2013 + Price of plows in 2013*Quantity of plows in 2013.

Nominal GDP₂₀₁₃ $= $ 3 \times 120 + $ 1 \times 1100 + $ 200 \times 70 = $ 360 + $ 1100 + $ 14000 = $ 15460$