Bob's Barber Shop cut 3,000 heads of hair in 2009 and 3,100 in 2010. The price of a haircut was $7 in 2009 and $8 in 2010. If 2009 is the base year, what was Bob's contribution to real GDP in 2009?

Question

Quizplus · Accepted Answer

To calculate real GDP, we need to find the value of output (in this case, the number of haircuts) at the constant price of the base year (2009). 
Value of output in 2009 = 3,000 haircuts x $7 per haircut = $21,000 
Since 2009 is the base year, its value of output is already in constant prices, so there is no need to adjust for inflation. Therefore, Bob's contribution to real GDP in 2009 is $21,000.

Bob's Barber Shop Cut 3,000 Heads of Hair in 2009