Refer to Table 19-9. Suppose that the above table represents the goods and services produced in a very simple economy in 2016. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP for the year 2016
What will be an ideal response?
First, we must decide which goods to include in the calculation of GDP. GDP is defined as the money value of final goods and services produced. Since steel is included in the production of autos, it is an intermediate good, not a final good. So steel should be excluded from the calculation. Final goods and services are goods and services consumed by the ultimate user of the good or service. All the other goods and services in the table are considered final goods.
Next, the money value of these final goods and services must be calculated. The money value is found by multiplying the price of the good or service times the quantity produced of that good or service. The total money value is found by summing up the individual money values. Thus GDP for 2016 = ($200 × 5,000 ) + ($25,000 × 500 ) + ($2,000 × 100 ) = $1,000,000 + $ 12,500,000 + 200,000 = $13,700,000.
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Refer to the figure above. What is the consumer surplus when Lithasia opens up to free trade?
A) $155 B) $215 C) $245 D) $325
As one moves down a straight-line demand curve, the elasticity decreases.
Answer the following statement true (T) or false (F)
Suppose that in Belize, the opportunity cost of producing a sailboat is 5 hang gliders. In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders
a. What is the opportunity cost of producing a hang glider for Belize? b. What is the opportunity cost of producing a hang glider for Honduras? c. Which country has a comparative advantage in the production of hang gliders? d. Which country has a comparative advantage in the production of sailboats?
People can be prevented from using a good if the good is
a. a private good or a club good. b. a private good or a common resource. c. a public good or a common resource. d. a private good or a public good.