HW1-Answer Key(4)

Answer to q6 20 points to produce 10 cans of coke 1

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Unformatted text preview: Answer to Q6 (20 Points) To produce 10 cans of coke, 1 barrel of oil is used (as intermediate good, input for coke production) To produce 200 cans of coke, 20 barrel of oil is used (as intermediate good, input for coke production) To produce 300 cans of coke, 30 barrel of oil is used (as intermediate good, input for coke production) 170 – 20 = 150 barrel of oil (as final good) 130 – 30 = 100 barrel of oil (as final good) (Reminder: Only final goods are included to GDP !) Final Goods 2012 2013 P Q P Q Coke $1 200 $3.5 300 Oil $2 150 $3.0 100 a) ∑ ∑ 4 Stony Brook University ECO 305 – Summer II, 2013 Arda Aktas 07/11/2013 ___________________________________________________________________________ b) - Taking 2012 as basis year: ∑ ∑ - Taking 2013 as basis year: ∑ ∑ c) - Taking 2012 as basis year: - Taking 2013 as basis year: Part B : True or False and EXPLAIN (Each one is 3 points) 1. False. True output is GDP plus all production that is not transacted in the market. 2. F...
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