Question

Assume that the hypothetical economy of Econoland has 8 workers in year 1, each working 1,225 hours per year (35 weeks at 35 hours per week). The total input of labor is 9,800 hours. Productivity (average real output per hour of work) is $10 per worker. Instructions: In parts a and b, enter your answers as a whole number. In part c, round your answer to 2 decimal places.

What is real GDP in Econoland?

Answer 1

The real GDP for Econoland in year 1 is $98,000, calculated by multiplying the total labor input (9,800 hours) by the productivity rate ($10 per worker per hour).

Step-by-step explanation:

To calculate the real GDP for Econoland, we multiply the total labor input by the productivity per hour. In Econoland's hypothetical economy, we have 8 workers each working 1,225 hours annually, resulting in a total input of labor being 9,800 hours. With the productivity stated as $10 per worker per hour, the real GDP is found by the following calculation: To calculate the real GDP in Econoland, we need to multiply the total input of labor by the average real output per hour of work.

Real GDP = Total labor input × Productivity per hour

Real GDP = 9,800 hours × $10/hour

Real GDP = $98,000

Therefore, the real GDP for Econoland in year 1 is $98,000.