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

$24
24 dollars

$16
16 dollars

$32
32 dollars

$26

Answer 1

To calculate the Real GDP for 1989 using 1988 as the base year, we need to use the quantities from 1989 but the prices from 1988.

Here's how to calculate it:

1. Milk:

   • Quantity in 1989: 15
   • Price in 1988: $1.00
   • Total = 15 * $1.00 = $15

2. Butter:

   • Quantity in 1989: 20
   • Price in 1988: $0.50
   • Total = 20 * $0.50 = $10

3. Eggs:

   • Quantity in 1989: 4
   • Price in 1988: $0.25
   • Total = 4 * $0.25 = $1

Now, we sum the totals for all three products:

• Total Real GDP = $15 (Milk) + $10 (Butter) + $1 (Eggs)
• Total Real GDP = $26

So, the Real GDP in 1989, with 1988 as the base year, is $26.