The table shows some data for an island economy which produces only bus rides an

Question

The table shows some data for an island economy which produces only bus rides and hot chocolate. The base year is 2015. Calculate the value of 2016 production in 2015 prices and the percentage increase In 2015 tem Bus rides QuantityPrice 90 57 $3 each $9 each Hot chocolate in production when valued at 2015 prices In 2016 Item Bus rides Hot chocolate69 The value of 2016 production in 2015 prices: Quantity 113 Price $6 each $6 each The percentage inrease in production when valued at 2015 prions is percent Answer to 1 decimal place

Explanation / Answer

a. Value of 2016 production = summation (price * quantity).

Value of 2016 production = 113 * 3 + 69 * 9.

Value of 2016 production = 339 + 621 = $960.

Value of 2015 production = 90 * 3 + 57 * 9

Value of 2015 production = 270 + 513

Value of 2015 production = $783

% increase = final value-initial value/initial value * 100

% increase = 960-783/783*100 = 22.7%

b. Nominal GDP = summation (price * quantity).

NGDP in 2015 = 92*3 + 66*4 = $540.

NGDP in 2016 = 72*4 + 69*8 = $840.

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