Examine the following data for a hypothetical centrally planned economy that subsequently freezes prices so that they are not allowed to change: $$\begin{array} { | c | c | c | c | }
\hline \text { Good } & \text { Quantity } & \begin{array} { c }
\text { Controlled } \
\text { Price }
\end{array} & \text { Market Price } \
\hline \begin{array} { c }
\text { Higher } \
\text { Education }
\end{array} & 200 & \$ 1,000 & \$ 3,000 \
\hline \text { Cereal } & 10,000 & \$ 5 & \$ 1 \
\hline
\end{array}$$ (A) Assume that hepher education and cereal are the anly godes and services produced in this economy. Calculate GDP under the cantrdled prices and under market prices, a5suring the quuantities do not change. Did government-5et prices result in an under- ar đvervaluation af praduction an the whole?
(B) How do people value each good in relation to previously cantralled prices?

Question

Examine the following data for a hypothetical centrally planned economy that subsequently freezes prices so that they are not allowed to change: $$\begin{array} { | c | c | c | c | } 
\hline \text { Good } & \text { Quantity } & \begin{array} { c } 
\text { Controlled } \
\text { Price }
\end{array} & \text { Market Price } \
\hline \begin{array} { c } 
\text { Higher } \
\text { Education }
\end{array} & 200 & \$ 1,000 & \$ 3,000 \
\hline \text { Cereal } & 10,000 & \$ 5 & \$ 1 \
\hline
\end{array}$$ (A) Assume that hepher education and cereal are the anly godes and services produced in this economy. Calculate GDP under the cantrdled prices and under market prices, a5suring the quuantities do not change. Did government-5et prices result in an under- ar đvervaluation af praduction an the whole?
(B) How do people value each good in relation to previously cantralled prices?

Quizplus · Accepted Answer

The Answer of Examine the following data for a hypothetical centrally planned economy that subsequently freezes prices so that they are not allowed to change: $$\begin{array} { | c | c | c | c | } 
\hline \text { Good } & \text { Quantity } & \begin{array} { c } 
\text { Controlled } \
\text { Price }
\end{array} & \text { Market Price } \
\hline \begin{array} { c } 
\text { Higher } \
\text { Education }
\end{array} & 200 & \$ 1,000 & \$ 3,000 \
\hline \text { Cereal } & 10,000 & \$ 5 & \$ 1 \
\hline
\end{array}$$ (A) Assume that hepher education and cereal are the anly godes and services produced in this economy. Calculate GDP under the cantrdled prices and under market prices, a5suring the quuantities do not change. Did government-5et prices result in an under- ar đvervaluation af praduction an the whole?
(B) How do people value each good in relation to previously cantralled prices?

Examine the Following Data for a Hypothetical Centrally Planned Economy