Question

In: Economics

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The...

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

GOOD	QUANTITY (millions)	PRICE 2017 ($)	PRICE 2018 ($)
Coconuts	100	0.95	0.90
Pineapples	260	1.20	1.40
Lobsters	210	2.00	2.00

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

GOOD	QUANTITY (millions)	PRICE 2017 ($)	PRICE 2018 ($)
Coconuts	100	0.95	0.90
Pineapples	260	1.20	1.40
Lobsters	210	2.00	2.00

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Solutions

Expert Solution

PROBLEM-1

the correct answer for the given problem is second option.

SOLUTION-we can solve the problem as follows-

STEP-1

first of all we would calculate the value of all the three goods for the year 2017.we would calculate the value by multiplying price to quantity.price would be taken for the year 2017.

STEP-2

now, we would calculate the value of all the three goods for the year 2018 and we would take the price of 2018 and then multiply the quantity with it.we would obtain the value of goods in 2018 as follows-

STEP-3-

we would calculate the CPI by dividing the value of goods in 2018 by the value of goods in 2017 and then multiply the obtained value by 100.the value would be somewhere aroung 105.68 which would be rounded-off to 105.7.

PROBLEM-2.

the correct option for the second problem is second option.

SOLUTION-

as we can observe and analyze that second question is exactly similar to the previous problem that is problem 1,

NOTE-

therefore the steps and calculation would remain same as answered in the first problem.

And therefore the value of goods in 2017 would be $827 and value of goods in 2018 would be $874 and the CPI would be equal to 105.7

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and catsup...

Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and catsup in 2010. Assume one half of the tomatoes are used in making the catsup and the other half of tomatoes are purchased by households. Product Quantity Price ($) Shoes 40 50 DVDs 100 25 Tomatoes 2000 1 Catsup 300 5 .What is the nominal GDP in 2010 for this simple economy?b.In 2011, suppose that the whole tomatoes products were used in making the catsup...

Suppose a simple economy produces only two goods, pillows and rugs. In the first year, 50...

Suppose a simple economy produces only two goods, pillows and rugs. In the first year, 50 pillows are produced, and sold at $5 each; 11 rugs are produced, and sold at $50 each. In the second year, 54 pillows are produced, and sold for $6 each; 12 rugs are produced, and sold at $52 each. In the third year, 60 pillows are produced and sell for $7.00 dollars each; 14 rugs are produced and sold for 64 dollars each. Calculate...

1. Suppose that a simple economy produced only three goods: wheat, automobiles, and chairs. The table...

1. Suppose that a simple economy produced only three goods: wheat, automobiles, and chairs. The table below lists the quantity and prices for each of the goods for year 2000 and 2010. Based on table, answer the following questions Quantity produced in 2000 Price in 2000 Wheat 100 $5 Automobiles 200 $40,000 Chairs 400 $10 Calculate nominal GDP in year 2000. Suppose prices doubled by 2010 but production stayed the same. Calculate the nominal value of GDP in 2010. Suppose...

A very simple economy produces three goods: movies, burgers, and bikes.

able 19-17 2013 2018ProductQuantityPriceQuantityPriceMovies 20 $6.00 30 $7.00Burgers 100 2.00 90 2.50Bikes 3 1,000.00 6 1,100.00A very simple economy produces three goods: movies, burgers, and bikes. The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.Refer to Table 19-17. What is real GDP in 2018, using 2013 as the base year?

Consider a simple example economy where there are two goods, coconuts and restaurant meals (coconut-based). There...

Consider a simple example economy where there are two goods, coconuts and restaurant meals (coconut-based). There are two firms. A coconut producer collects and sells 10 million coconuts at $2.00 each. The firm pays $5 million in wages, $0.5 million in interest on an old loan, and $1.5 million in taxes to the government. We also know that 4 million coconuts are sold to the public for consumption, and 6 million coconuts are sold to the restaurant firm, which uses...

Suppose Lost Island has an economy that only produces two products: guns and butter . These...

Suppose Lost Island has an economy that only produces two products: guns and butter . These points below could be shown on a production possibilities curve— the represent all major combinations of these products that this society can produce. Type of Product : Productions Alt A B C D E Guns 0 1. 2. 3. 4 Butter (1lb tub) 10 9. 7. 4. 0 1.What do you think Lost should produce at? 2. From this point, explain what the opportunity...

Assume a simple economy that produces only 3 goods. In the base year: 4 units of...

Assume a simple economy that produces only 3 goods. In the base year: 4 units of books sold at a price of $10, 4 units of clothing sold at a price of $5, and 20 units of food sold at a price of $2. In the current year: 6 units of books sold at a price of $8, 2 units of clothing sold at a price of $7, and 15 units of food sold at a price of $3. Calculate...

Assume that you live in a simple economy in which only three goods are produced and...

Assume that you live in a simple economy in which only three goods are produced and traded: fish, fruit, and meat. Suppose that on January 1, 2010, fish sold for $3.50 per pound, meat was $4.00 per pound, and fruit was $2.50 per pound. At the end of the year, you discover that the catch was low and that fish prices had increased to $5.00 per pound, but fruit prices stayed at $2.50 and meat prices had actually fallen to...

1. A simple economy has 100 workers and produces only two goods – coffee and doughnuts....

1. A simple economy has 100 workers and produces only two goods – coffee and doughnuts. Labour is the only factor of production, but some workers are better suited to producing coffee than doughnuts (and vice versa). The table below shows the maximum amount of output of each good possible from various levels of labour input. Number of workers producing coffee 0 25 50 75 100 Monthly production of coffee (hundreds of pounds) 0 20 50 75 80 Number of...

A simple economy produces only 3 goods: pizza, video games and candy. The prices and quantities...

A simple economy produces only 3 goods: pizza, video games and candy. The prices and quantities produced for three consecutive years are given below: Item 2011 2011_ 2012 2012_ 2013 2013_ Quantity Price Quantity Price Quantity Price Pizza 100 $0.50 125 $0.50 125 $0.60 Video Games 75 $1.00 85 $1.00 85 $1.25 Candy 20 $5.00 30 $5.00 30 $6.00 d. Calculate real GDP for all years in chained-2012 dollars, that is using 2012 as the arbitrary reference year! (This will...

Subjects