C) Product Quantity Price Sweatshirts QTY: 50 PRICE: $35

Economics Aug 14, 2020

C) Product Quantity Price

Sweatshirts QTY: 50 PRICE: $35.00

Dental examinations QTY: 40 PRICE $75.00

Coffee drinks QTY: 1000 PRICE: $4.00

Chewing gum QTY: 2000 PRICE: $0.50

Suppose that a simple economy produces only sweatshirts, dental examinations, coffee drinks, and chewing gum. Using the information in the above table, nominal GDP for this simple economy equals:

A) $7,250

B) $8,750

C) $9,750

D) None of these are correct

Expert Solution

Computation of Nominal GDP:

Nominal GDP = (Price of Sweatshirt*Quantity of Sweatshirt) + (Price of Dental Examination*Quantity of Dental Examination) + (Price of Coffee Drinks*Quantity of Coffee Drinks) + (Price of Chewing Gum *Quantity of Chewing Gum)

= ($35*50) + ($75*40) + ($4*1,000) + ($0.50*2,000)

= $1,750 + $3,000 + $4,000 + $1,000

Nominal GDP = $9,750

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