Use the table to answer the question.

Question

1988 1989
Quantity Price ($) Quantity Price ($)
Milk 10 1.00 15 1.20
Butter 8 0.50 20 0.50
Eggs 8 0.25 4 1.00
The table above gives the prices and quantities for a hypothetical country that only produces milk, butter, and eggs. With 1988 as the base year, what is the Real GDP in 1989?

(1 point)
Responses

$26
26 dollars

$16
16 dollars

$24
24 dollars

$32

Answer 1

To calculate the Real GDP for 1989 using 1988 as the base year, we need to determine the value of the quantities produced in 1989 using the prices from 1988.

We'll calculate the Real GDP for each item (milk, butter, and eggs) by multiplying the quantity produced in 1989 by the price from 1988.

1. Milk:

   • Quantity in 1989 = 15
   • Price in 1988 = $1.00
   • Real GDP contribution from milk = 15 * 1.00 = $15

2. Butter:

   • Quantity in 1989 = 20
   • Price in 1988 = $0.50
   • Real GDP contribution from butter = 20 * 0.50 = $10

3. Eggs:

   • Quantity in 1989 = 4
   • Price in 1988 = $0.25
   • Real GDP contribution from eggs = 4 * 0.25 = $1

Now, we sum up the Real GDP contributions from all products:

Real GDP = Real GDP from milk + Real GDP from butter + Real GDP from eggs Real GDP = $15 + $10 + $1 = $26

Therefore, the Real GDP in 1989 is $26.