Question

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .

Year Price of Movies Quantity of Movies Prices of Popcorn Quantity of Popcorn
2014 $10 500 $5 1000
2015 $11 600 $4 900
2016 $12 650 $5 950
2017 $12 625 $6 925
Refer to Table 23-10. In which year was this country's real GDP highest?
A. 2015 B. 2017 C. 2014 D. 2016

Answer 1

The country's highest real GDP was in 2016, calculated by using 2015 prices as the base year.

Step-by-step explanation:

To determine when the country's real GDP was highest, we need to calculate the real GDP for each year using the base year prices of 2015. Real GDP is calculated by multiplying the quantities of goods produced by their prices in the base year.

2014 Real GDP: (500 movies × $11 per movie) + (1000 popcorns × $4 per popcorn) = $5,500 + $4,000 = $9,500

2015 Real GDP: (600 movies × $11 per movie) + (900 popcorns × $4 per popcorn) = $6,600 + $3,600 = $10,200

2016 Real GDP: (650 movies × $11 per movie) + (950 popcorns × $4 per popcorn) = $7,150 + $3,800 = $10,950

2017 Real GDP: (625 movies × $11 per movie) + (925 popcorns × $4 per popcorn) = $6,875 + $3,700 = $10,575

Looking at the numbers, the highest real GDP was in 2016.