Question

The economy of Tuland produces only two products oranges and dvds. The following information is available for production and prices of Tuland's products for the years 2009 and 2010. Quantity of oranges Quantity of dvds Price of oranges Price of dvds 2009 100 20 $5.00 $40.00 2010 110 30 $5.25 $24.00 Using above information, calculate the following values

a. Real GDP for 2009 using 2009 as base year equals Enter your response rounded to two decimal places.)
b. Real GDP for 2009 using 2010 as base year equals (Enteyour response rounded to two decimal places.)
c. Real GDP for 2010 using 2009 as base year equals SEnter your response rounded to two decimal places.)
d. Real GDP for 2010 using 2010 as base year equals SEnter your response rounded to two decimal places.)
e. GDP growth rate using 2009 as base year equals %. Enter your response rounded to two de ama/places.
f. GDP growth rate using 2010 as base year equals %. (Enter your response rounded to two decimal places)
g. The arithmetic average of he two growth rates equals %. Enter your response rounded to two decimal paces)

Answer 1

A.$1300

B.$1005

C.$1750

D.$1297.50

E. 34.62%

F. 29.10%

G. 31.86%

Step-by-step explanation:

Given the following ;

YEAR 2009

Quantity of orange = 100

Price of orange = $5

Quantity of DVD = 20

Price of DVD = $40

YEAR 2010

Quantity of orange = 110

Price of orange = $5.25

Quantity of DVD = 30

Price of DVD = $24

Real GDP is given by;

Current year Quantity × Base year Price

A.) Real GDP for 2009 using 2009 as the base year

(Quantity of orange(2009) × price of orange(2009)) + (Quantity of DVD(2009) × price of DVD(2009))

(100×$5) + (20×$40) = $500 + $800 = $1,300

B.) Real GDP for 2009 using 2010 as base year.

(Quantity of orange(2009) × price of orange(2010)) + (Quantity of DVD(2009) × price of DVD(2010))

(100 × $5.25) + (20 × $24)

$525 + $480 = $1005

C.) Real GDP for 2010 using 2009 as base year

(Quantity of orange(2010) × price of orange(2009)) + (Quantity of DVD(2010) × price of DVD(2009))

(110 × $5) + (30 × $40)

$550 + $1200 = $1750

D.) Real GDP for 2010 using 2010 as base year

(110 × $5.25) + (30 ×$24) = $577.5 + $720 = $1297.50

E.) growth rate using 2009 as base year.

(2010 Real GDP - 2009 Real GDP) ÷ 2009 Real GDP

($1750 - $1300)/$1300

0.3462 × 100 = 34.62%

F.) GDP growth rate using 2010 as base year = ($1297.5 - $1005)/$1005

= 0.2910 × 100 = 29.10%

G.) Arithmetic average of growth rates = (34.62 + 29.10)%/2 = 63.72%/2 = 31.86%

Answer 2

1) Real GDP = Base year price X Current year quantity

Real GDP for 2009 using 2009 as base year = 5 X 100 + 40 X 20 = 500 + 800 = 1300

2) Real GDP for 2009 using 2010 as base year = 5.25 X 100 + 24 X 20 = 525 + 480 = 1005

3) Real GDP for 2010 using 2009 as base year = 5 X 110 + 40 X 30 = 550 + 1200 = 1750

4) Real GDP for 2010 using 2010 as base year = 5.25 X 110 + 24 X 30 = 577.5 + 720 = 1297.5

5) GDP growth rate using 2009 as base year = (Real GDP for 2010 - Real GDP for 2009)/Real GDP for 2009 X 100

= (1750 - 1300)/1300 X 100 = 450/13 = 34.61

6) GDP growth rate using 2010 as base year = (1297.5 - 1005)/1005 X 100 = 29.10

7) Arithmetic average of growth rates = (34.61 + 29.10)/2 = 63.71/2 = 31.85