We are studying an economy that produces and consumes two goods: hot dogs and hamburgers. The table below shows data for years 2010 and 2020. [table]
| Year 2010 | Year 2020 Price of a hot dog | $2 | $4 Price of a hamburger | $3 | $4 Quantity of hot dogs | 200 | 250 Quantity of hamburgers | 200 | 500
[/table] Calculate nominal GDP 2010

Question

BlackTom AI · Accepted Answer

To tackle the GDP calculation, I’ll go through each piece of data and multiply price by quantity for 2010, then sum the results.
Option a (1200): If someone computed 2010 values as 600 for hot dogs (2 × 200) and 600 for hamburgers (3 × 200) and added to get 1200, they assumed the hamburger quantity or price differently, which isn’t what the table shows for 2010.
Option b (1100): This would come from adding 400 (hot dogs) and 700 (hamburgers) or some similar split. But 700 for hamburgers would require 350 per hamburger or 350×2 hamburgers, which isn’t supported by the given 2010 data (price 3, quantity 200 gives 600).
Option c (1000): This matches the correct 2010 calculation: hot dogs value = 2 × 200 = 400, hamburgers value = 3 × 200 = 600, and total nominal GDP for 2010 = 400 + 600 = 1000. This uses exactly the 2010 prices and quantities listed in the table.
Option d (900): This would imply a smaller contribution from either hot dogs or hamburgers, e.g., 300 for hot dogs (not 400) or 600 for hamburgers (which is correct), but the correct hot dog value is 400, so 900 is not consistent with the 2010 data.
Overall, the correct approach is to compute each good’s 2010 value using 2010 price and 2010 quantity, then sum, which yields 1000. The other options arise from misapplying prices or quantities or mixing 2010 with 2020 values.

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