PRODUCTION AND PRICE STATISTICS

a. Suppose that a simple economy produces only the following four goods and
services: textbooks, hamburgers, shirts and cotton. Assume that all of the
cotton is used in the production of shirts. Use the information in the following
table to calculate nominal GDP for 2018.
PRODUCTION AND PRICE STATISTICS FOR 2018
PRODUCT QUANTITY PRICE ($)
Textbooks 100 60.00
Hamburgers 100 2.00
Shirts 50 25.00
Cotton 800 0.60
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b. An artist buys scrap metal from the local steel mill as raw material for her metal
sculptures. Last year she bought $5000 worth of scrap metal. During the year
she produced 10 metal sculptures that she sold for $800 each to the local art
gallery. The gallery sold all of them to local art collectors at an average price of
$1000 each. For the 10 metal sculptures, what was the total value added of the
artist and what was the total value added of the gallery?

Sample Solution

ACED ESSAYS