Consider a small economy where factor supply is 4000 units, the factor utilization rate is 0.8 and a simple measure of productivity (GDP per factor employed)is $50. This economy's GDP is
A)$200 000
B)$320 000
C)$160 000
D)$40 000
E)$500 000

Question

Quizplus · Accepted Answer

The GDP is calculated by multiplying the factor supply by the factor utilization rate and then by the productivity measure: 4000 units * 0.8 * $50 = $160,000.

Consider a Small Economy Where Factor Supply Is 4000 Units