Question

A south sea island produces only coconuts. in 2012, the price of a coconut is $1 and the quantity produced is 200. in 2013, the price of a coconut is $1.50 and the quantity produced is 250. 2012 is the base year. real gdp in 2013 is

Answer 1

The real GDP for the year 2013 is equivalent to $250. This is solved by simply taking the base year price for the good, $1, and multiplying it by the production value in the year in question, which is 250. This gives real GDP in terms of a base year.