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Unformatted text preview: ic product
$200,000 $1,000 $221,000 This total, $221,000, is the gross domestic
product, or GDP, of the tiny economy.
A tiny economy has two
goods, A and B. It produces 100 units of A
and 200 units of B this year. The price of A is
EXAMPLE: 11 (286-309) EMC Chap 11 EXH I BIT 11/17/05 11-1 6:05 PM Page 289 Gross
Gross Domestic Product (GDP)
Product (GDP) 10 computers 10 cars + 10 watches + = G DP
$221,000 at $2,000 each
equals $20,000 at $20,000 each
equals $200,000 $4 and the price of B is $6. It follows that its
GDP is $1,600. We got this dollar figure by
finding the market value of A ($4
units $400), the market value of B ($6
$1,200), and then adding the
two values. Why Count Only Final
The definition of GDP specifies “final
goods and services”; GDP is the total market
value of all final goods and services produced annually in a country. Economists
often distinguish between a final good and
an intermediate good.
A final good is a good sold to its final
user. When you buy a hamburger at a fastfood restaurant, for example...
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- Winter '14