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

$32
32 dollars

$26
26 dollars

$16
16 dollars

$24

Answer 1

To calculate the Real GDP for 1989 using 1988 as the base year, we need to use the prices from 1988 and multiply them by the quantities produced in 1989.

Here's a breakdown:

1. Milk:

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

2. Butter:

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

3. Eggs:

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

Now, we sum these values to get the Real GDP for 1989:

\[ \text{Real GDP} = \text{GDP from Milk} + \text{GDP from Butter} + \text{GDP from Eggs} \] \[ \text{Real GDP} = 15 + 10 + 1 = 26 \]

Therefore, the Real GDP in 1989 is $26.