Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above.Assume Country A initially has a population of 10,000 people.If its population grows by 50 percent but its GDP remains constant,how will the standard of living change in Country B?
A) GDP per capita remains constant.
B) GDP per capita decreases by 33 percent.
C) GDP per capita decreases by 50 percent.
D) GDP per capita increases by 33 percent.

Question

Quizplus · Accepted Answer

GDP per capita in Country A will decrease because the same GDP is now divided among a 50% larger population, reducing the income per person by 33 percent. The question mistakenly asks about Country B, but it's clear the intent was to ask about the impact of population growth in Country A on its own standard of living.

Scenario: the Price of a Standard Basket of Goods in Country