Table 8-2

-Refer to Table 8-2.Suppose that a simple economy produces only four goods and services: shoes,DVDs,tomatoes,and ketchup.Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households.Using the information in the above table,nominal GDP for this simple economy equals
A)$7,400.
B)$6,400.
C)$5,800.
D)2,440 units.

Question

Table 8-2
 
-Refer to Table 8-2.Suppose that a simple economy produces only four goods and services: shoes,DVDs,tomatoes,and ketchup.Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households.Using the information in the above table,nominal GDP for this simple economy equals
A)$7,400. 
B)$6,400. 
C)$5,800. 
D)2,440 units.

Quizplus · Accepted Answer

Nominal GDP is calculated as the sum of the values of all final goods and services produced in an economy in a given year, using the current market prices. 
From the table, we can see that the quantity and price of each good are given. 
The value of shoes = 1000 x $10 = $10,000 
The value of DVDs = 500 x $20 = $10,000 
The value of half of the tomatoes used in making ketchup = (2000/2) x $2 = $2,000 
The value of ketchup = 500 x $4 = $2,000 
The value of the other half of the tomatoes purchased by households = (2000/2) x $1 = $1,000 
Therefore, the total nominal GDP = $10,000 + $10,000 + $2,000 + $2,000 + $1,000 = $6,400.

Table 8-2 -Refer to Table 8-2.Suppose That a Simple Economy Produces Only