Econ416PS1_Answers - Theory of Economic Development Econ...

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as an input in the production of vodka) and given the quantities and prices that prevail in Country B, what is the total production of Country B? Value added in potato industry: 150*2 = 300 million hryvnias Value added in vodka industry: 20*10 = 200 million hryvnias Value added in haircut industry: 60*10 = 600 million hryvnias Summing the value added from each industry we get a total production of: 300 + 200 + 600 = 1100 million hryvnias. (d) Of course, the production of Country A (your answer to part b) is valued in rubles while the production of Country B (your answer to part c) is valued in hryvnias. If we want to compare these two numbers, we’ll need to get them into a common currency. Suppose that the exchange rate between these two currencies is 2 rubles per hryvnia.
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This note was uploaded on 04/30/2010 for the course ECON 412 taught by Professor Gribbin,j during the Spring '08 term at UMBC.

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Econ416PS1_Answers - Theory of Economic Development Econ...

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