In an economy with two goods, beer and pizza, if pizza costs £10 per pie and beer costs £5 per six pack and if 100 six packs of beer and 200 pizzas are produced in a year, then nominal GDP that year would be:

Question

Quizplus · Accepted Answer

We can calculate the nominal GDP by adding up the total value of all final goods and services produced in the economy.

To calculate the value of beer produced, we need to divide the total number of six packs produced (100) by 6 (since there are 6 beers in a pack) and then multiply by the price per six pack (£5). So the value of beer produced is:
(100/6) x £5 = £833.33

To calculate the value of pizza produced, we simply multiply the number of pizzas produced (200) by the price per pizza (£10). So the value of pizza produced is:
200 x £10 = £2,000

Now we can add up the value of beer and pizza to get the nominal GDP:
£833.33 + £2,000 = £2,833.33

Therefore, the best choice is B (£2,500), which is the closest option to the calculated nominal GDP of £2,833.33.

In an Economy with Two Goods, Beer and Pizza, If