Question

Imagine that a country produces only three goods: apples, bananas, goods are listed below. Goods Price L Apples Bananas Carrots Quantities Produced 9 12 20 | $2.00 1.50 1.00 Instructions: Round your answers to 2 decimal places.

Answer 1

The Gross Domestic Product (GDP) measures the market value of all the final goods and services produced in an economy in a year. It can be calculated by multiplying the price and quantity produced of each good produced and then adding them together.

So, in this case, the GDP can be calculated as:

$GDP=P_{C}\times C\: +\: P_{A}\times A\: +\: P_{B}\times B$

Where A, B and C are the quantity produced of apples, bananas and carrots respectively and P_A, P_B and P_C denotes the price of apple, banana and carrot respectively.

The GDP is given as $80 and the increased price of carrot is not known.

Putting the values:

$GDP=P_{C}\times 20\: +\: 1.50\times 12\: +\: 2\times 9$

$80=P_{C}\times 20\: +\: 36$

$44=P_{C}\times 20\:$

$P_{C}=\frac{44}{20}=2.20$

So, the new price of carrots is $2.20.