Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was:
A) $5.
B) $6.50.
C) $9.50.
D) $11.

Question

Quizplus · Accepted Answer

To calculate the real GDP in 2009 at 2002 prices, we multiply the quantities of goods produced in 2009 by their prices in 2002. For apples, 5 produced in 2009 * $0.50 (2002 price) = $2.50. For oranges, 4 produced in 2009 * $1 (2002 price) = $4. Adding these amounts gives us $2.50 + $4 = $6.50.

Assume That Apples Cost $0