Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10,B = 30,C = 5.The current year per unit prices of these three goods are A = $2,B = $3,and C = $1. (Advanced analysis)Refer to the information.If the per unit prices of the three goods were each $1 in a base year used to construct a GDP price index,then the GDP price index in the current year is:

Question

Quizplus · Accepted Answer

To calculate the GDP price index, we use the formula: 
(GDP in current year at current prices/GDP in base year at base prices) × 100 
To find GDP in current year at current prices, we multiply the amount produced by the per unit prices for each good and add them up: 
GDP = (10 × 2) + (30 × 3) + (5 × 1) = $95 
To find GDP in base year at base prices, we multiply the amount produced by the per unit prices in the base year ($1 for each good) and add them up: 
GDP = (10 × 1) + (30 × 1) + (5 × 1) = $45 
Plugging these values into the GDP price index formula, we get: 
(GDP in current year at current prices/GDP in base year at base prices) × 100 = (95/45) × 100 = 211.1 
Therefore, the GDP price index in the current year is 211.1, which is closest to option B (255.5).

Answer the Question on the Basis of the Following Information