The USA has an aggregate disposable income of $5.2 trillion and $3.3 trillion in retail sales...

The USA has an aggregate disposable income of $5.2 trillion and $3.3 trillion in retail sales and a population of 330 million. Small City has an aggregate disposable income of $1.5 billion and $750 million in retail sales and a population of 50 thousand. Mid City has an aggregate disposable income of $5 billion and $2.5 billion in retail sales and a population of 250 thousand. Big City has an aggregate disposable income of $10 billion and $8 billion in retail sales and a population of 600 thousand. What is the BPI for Small City?

Solutions

Expert Solution

We need to calculate the BPI for Small city

We need to calculate how much Small city in each cateogory contributes to USA nation's categories

Small City's aggregate disposable income as a % of USA's aggregate disposable income = $1.5 billion / $5.2 trillion

We know that 1 trillion is 1000 billion

Small City's aggregate disposable income as a % of USA's aggregate disposable income = 1.5 / 5200

= 0.000288

Small City's retail sales as a % of USA's retail sales = $750 million / $3.3 trillion

= 0.75 billion / 3300 billion

Small City's retail sales as a % of USA's retail sales = 0.000227

Small City's population as a % of USA's population = 50,000 / 330 million

= 50000 / 330 * 106

= 5 / 33000

Small City's population as a % of USA's population = 0.000152

Now BPI = 0.5 * (Small City's aggregate disposable income as a % of USA's aggregate disposable income)

+ 0.3 * (Small City's retail sales as a % of USA's retail sales)

+ 0.2 * (Small City's population as a % of USA's population)

BPI of Small CIty = 0.5 * 0.000288 + 0.3 * 0.000227 + 0,2 * 0.000152

= 0.000144231 + 0.000068182 + 0.0000303030

= 0.000242716

orchestra answered 1 year ago

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