If an economy produces 50 oranges sold at $1 each and 100 bananas at $0.50 each, using GDP as the measure of output:

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Quizplus · Accepted Answer

GDP measures the market value of all final goods and services produced. In this case, oranges contribute $50 (50 oranges * $1) and bananas contribute $50 (100 bananas * $0.50) to the GDP, making their contributions equal, not one more important than the other. However, since each orange is priced at $1 and each banana at $0.50, it implies that in terms of price, oranges are weighted as being 2 times more important (or valuable) than bananas, reflecting their relative prices, not their contribution to GDP.

If an Economy Produces 50 Oranges Sold at $1 Each