Econ7002 Semester 2, 2022 Essay: Markets in Action Maximum 1,300 words — 35% of the course final mark Due by 4:00pm, Friday 21 October 2022 Choose a real-world market and a real-world company that operates in that market. Write a 1,300 word essay using the tools of economic analysis describing and explaining how a recent or upcoming domestic and/or international government policy could affect the company, its consumers and, if applicable, broader social welfare. Graphs and figures should be included if they support your analysis. You should summarise your analysis in a single paragraph in your essay’s conclusion. Finally, you should briefly criticise your analysis, emphasising its strengths and weaknesses for understanding and providing policy guidance in the real world. Provide a properly formatted references section (not a bibliography) for all cited claims. You must write the essay using the template provided. Failure to do so will attract a penalty. Your essay must be saved as a Word document and submitted via the Turnitin assignment folder on the Econ7002 Blackboard website by the due date and time. This is an exercise in which, among other outcomes, you need to demonstrate your independence in identifying and conducting an economic analysis of a relevant company+market+policy scenario. All information you need is contained in this instruction sheet. Please do not email questions about the assignment to your teaching team. All questions should be raised during the lecture, so that all students receive the same information. 1.1 Task Details 1) Briefly describe the nature and characteristics of your chosen company. 2) Briefly describe the prevailing market structure including (as applicable) relevant demandside and supply-side elasticities, externalities, public goods features, price controls, taxes, tariffs, subsidies, trade quotas and/or any other forces relevant to market efficiency and the firm’s competitiveness. 3) Briefly describe the recently enacted or upcoming domestic and/or international government policy facing the market. 4) Describe the announced reason and some other potentially plausible (possibly unannounced) reasons why the government might want to enact the policy. 5) Using the tools of economic analysis, explain how the announced government intervention will achieve its stated aims. Depending on the intervention, the analysis in both macroeconomics as well as microeconomics perspectives may be required. For example, if you use the macroeconomic policy such as unemployment benefits to analyse, then the macroeconomic impacts must be discussed. 6) Note any unintended consequences of the policy, briefly describing how they might arise. 7) List and briefly describe any other reasonable means the government possesses for achieving its stated aims. Include a short statement with each describing its likely market and welfare 1 Econ7002 Semester 2, 2022 impacts. Explain why the government chose to implement its announced policy instead of adopting another approach. 8) Find and briefly describe a real-life example of an essentially similar government intervention in an essentially similar market at any time previously anywhere in the world. Did that intervention produce its intended results? How can that example be used to inform your economic analysis in item 5, above? 9) Conclude your essay with a critical reflection about how useful your economics approach is for understanding and providing policy guidance in the analysed situation in the real world. 1.2 Clarifications and Guidelines • Item 5 is the centrepiece of your work. You should aim to do it well. • Market structure describes the conditions of the market, e.g., whether it is perfectly competitive, a monopoly, monopolistic competition, or an oligopoly. – You must clearly state the market structure on which you are basing your analysis. – Justify your statement of the market structure model you use. • Except for monopsonies and oligopsonies, you can choose a firm operating in any market structure for your essay. By the time we have discussed monopolies, you should have a good foundation for analysing perfect competition and monopoly market structures. Monopolistic competition and collusive oligopolies (which are in different respects both similar to monopolies) should also be quite accessible. Note that discussion of these are introduced relatively late in the course. Please be aware that if you choose a noncollusive oligopoly you will need to study much of the underlying theory of oligopolies on your own, including undertaking considerable research on material that we will not cover in this course. (If you are interested in an oligopolistic market, you can for example look at models of “Cournot competition.” It can help if you know calculus for this.) • Use proper and consistent referencing style, including in your citations. You need to provide any in-text citation wherever applicable. It is recommended to follow the UQ Harvard referencing style. Guidelines for correct referencing techniques can be found in the UQ library, which can be accessed on the website https://guides.library.uq.edu. au/referencing/uqharvard-version-for-printing. • Your essay’s word count must not exceed 1,300 words. Penalties apply otherwise. Your word count excludes material included in tables, figures, graphs and your essay’s References list. You must indicate the word counts in each section as per the template and ensure of the maximum 1,300 words in total. • You will benefit by using diagrams similar to those presented in the course and textbook. These should be fully and correctly labelled. Appropriate use of diagrams is essential for receiving high marks. 2 Econ7002 Semester 2, 2022 • The assignment is due by 4:00pm on Monday 11 October 2021. Unless prior agreement for late submission has been formally provided by the Course Administrator, essays submitted after the due date and time will be penalised according to the section 5.3 of the Econ7002 Electronic Course Profile. A description of the process required for obtaining an Extension of Assessment Due Date can be found in section 6.1 of the Econ7002 Electronic Course Profile. • Try to upload your assignment a few hours before the deadline since Blackboard and Turnitin system overloads can occur close to the deadline time. 1.3 Frequently Asked Questions (a) What is a “recent or upcoming policy”? A recent or upcoming policy is a policy that has been introduced in the last 12 months, i.e, October 2020 or later, or that is planned for the near future. The abolition within the last 12 months or planned abolition of a government policy also counts as a recent or upcoming policy. (b) Does the market and company I choose have to be Australian? No. However, all references must be in English (i.e., if you list a website, journal or newspaper article as a reference that supports your description of a foreign market, it must be in English). (c) I do not have the data to exactly plot the aggregate demand/supply curve in my market. What can I do? In almost all cases, you will not have the time or resources to gather the data to exactly plot the aggregate demand and supply curves for your market.1 Therefore, your figures will be mostly qualitative rather than quantitative in nature. The quantitative figure above exactly specifies where the demand and supply curves lie, whereas the mostly qualitative figure only specifies that the equilibrium price is 2, but leaves open the exact slopes of D and S, etc. The qualitative figure is nonetheless useful: 1 Of course, if you can access such data, that is fantastic! 3 Econ7002 Semester 2, 2022 e.g., by demonstrating that D and S still satisfy the laws of demand and supply, depicting relative price elasticities of demand and supply, etc. Despite the absence of detailed information, qualitative figures allow you to draw important conclusions. E.g., you may be able to conclude from your qualitative figures that after the government intervention, the market price will fall and consumer surplus will increase, or that the burden of a tax might fall unevenly on suppliers or consumers, even though you will not be able to determine by exactly how many dollars the price will fall, exactly how the tax burden will be split, or by exactly how many dollars consumer or producer surplus will change. (d) Do I have to format my essay in a particular way? Yes. Please use the template. • Include your personal name, your family name and your student number on top section. Also indicate the word counts in each section. Your word count should exclude material included in tables, figures, graphs and your essay’s References section. • Use 1.5 line spacing or double line spacing. • Fonts must be easily readable, including those used for figure captions. (e) My essay is 1,305 words long. Do I have to cut it down to 1,300 words? Yes, you have to. We are strict with the word limit. (f) How do I submit my essay? Instructions for the submission of the essay via Turnitin will be posted on blackboard closer to the submission deadline. The submission will be electronic in Word format only (no hardcopies or pdf format). (g) The Turnitin “similarity report” shows a similarity of x%. Is this still acceptable? Short answer: I do not know. Long answer: The similarity report is a tool that assists essay graders in recognising if a part of your essay has been plagiarised. In some cases, the report mistakenly picks up passages that have been correctly cited. In other cases, the report fails to pick up plagiarised passages. If your similarity score is 0% but you plagiarised and it is discovered by another method, I will refer your case for investigation. If your essay contains a correct quote that the report picks up, this will be ignored. What matters is not primarily the similarity score but that you do not plagiarise — this is an important responsibility that you have as an author. 1.4 Marking Guidelines Your submission will be graded on your performance in these areas: • Content: relevance to the question, sound interpretation and understanding of economic theory. • Clarity and robustness of argument: logical thinking, clarity, succinctness and coherence. • Fit of the theoretical model and analysis to the presented policy situation. 4 Econ7002 Semester 2, 2022 • Use of clear, well-labelled, relevant diagrams that support your arguments. • Evidence of reading outside of your main source article and textbook. • Use of references: correct and consistent citation format in the body of your essay; correct and consistent referencing format in the References section at the end of your essay. You should support your arguments with at least five (5) references . Note that the References section is just that. It is not a Bibliography (enter “references section vs bibliography” into your favourite internet search engine to see the difference). The following problems will attract penalties: • Failure to answer the question (see Task Details, above). • Writing style: incorrect grammar or spelling; long or disconnected sentences; incoherence; over-use of quoted material. • Failing to grasp or address the core concepts or ideas. • Poorly or ineffectively structured essay. • Unclear or illogical flow of ideas. • Ineffective, badly composed or unclear arguments. • Weak or missing Introduction section. • Weak or missing Conclusion section. • Weak or missing critique of your analysis in your Conclusion section. • Improper or missing citations and references. • Including a Bibliography rather than a References section. • Any amount of plagiarism. • Late submission. • Not using the template • Exceeding the word count • Choosing an older policy than instructed or making up the policy yourself. 1.5 Check-List and Hints I recommend that you check your essay against the following bullet points. • The main goal of your essay is not to reproduce a textbook or toy model analysis, but rather to apply your knowledge of (theoretical) economic models in one specific, real-world case. Ask yourself whether your analysis of the real-world scenario is the centerpiece of your work? 5 Econ7002 Semester 2, 2022 • Do you explicitly name the one policy whose effects you analyse? • Is your writing focused (free of unnecessary information) and have you explained your arguments well? Imagine that you have written your essay for your company CEO. Say you write about Widget Empire Australia, an Australian subsidiary of Widget Empire Inc., a world-leader in the production of widgets operating in dozens of countries. You are analysing the effects of an import tariff on widgets recently passed into law by the Australian Government. – Your CEO is a very busy person. She needs to grasp the consequences of the import tariff on widgets in the shortest possible time. Hence, it is important that your essay remains as focused as possible. For example, a brief description of the nature and characteristics of Widget Empire Australia is useful background information that helps establish the context of your main analysis. It may be useful for justifying why you based your analysis on the economic model of a monopoly. However, a history of Widget Empire U.S.A., the U.S. subsidiary of Widget Empire, may not be necessary to understand your analysis in the Australian widget market context. Your CEO would prefer that you skip a description of Widget Empire U.S.A., as she does not need to understand Widget Empire U.S.A. for the issue at hand. – It is crucial that you underpin your claims with factual information and logical analysis. For example, your CEO may be frustrated if you simply write: The demand for widgets is relatively inelastic. You have provided no basis for your CEO to evaluate that claim. She would much prefer that you explain and justify your claim. For example, The demand for widgets is relatively inelastic in Australia. This is because widgets are an essential tool for anybody living close to a beach (like the majority of the Australian population), and because there are no good substitutes for widgets. Walter Widget estimates the elasticity of the demand for widgets to be 0.13 in absolute terms (Widget, 2019, p. 17). Later, in your References section, you can provide the exact reference: Widget, Walter (2019), Widgets for Everybody, New York:Widget International Press, 2nd edition. • Ensure you do not claim things unless they are supported by facts or conclusions from reputable sources. You will need to cite every claim you make. For example, it is poor form to write: Widget Empire Australia’s sales increased by 50% in 2018. Rather, you should include a properly cited source for the claim, e.g., Widget Empire Australia’s sales increased by 50% in 2018 (Widget, 2019, p. 6). then include a reference to Widget (2019) in your References section. 6 Econ7002 Semester 2, 2022 • Does the economics model you chose for your analysis fit your chosen issue well? Have you justified your modelling choice? Have you justified all assumptions that you make? • Is your essay well-structured? A clear structure makes your essay flow smoothly, thereby making it easy to read. Ideally, you should split your essay into appropriate, well-defined and well-titled sections. • Have you fully and properly labelled all figures and diagrams? • Have you explained all figures and diagrams in your essay? It is not enough to simply add diagrams to your work. You must also explain to the reader what each one means and the conclusions you draw from it. • Are all words spelt correctly? Are all sentences grammatically correct? In general, it is good practice to use plain English rather than complicated expressions and complex sentence structures. • Do all citations possess a corresponding entry in your References section? Are any entries in your References section uncited in your essay body? If so, they are bibliographic entries and will be penalised (see Marking Guidelines, above.) • Please be very careful to avoid plagiarising any material in any part of your essay. Copying from others, from textbooks and internet sources is unacceptable unless properly cited. Plagiarism can involve serious consequences. 7 Lecture 7 Chapter 13 GDP and Economic Growth in the Long Run Learning Objectives — Explain how total production in an economy is measured. — Explain what the Gross Domestic Product (GDP) is — Able to measure the GDP using the production or value-added method, income method, and the expenditure method. — Understand the difference between real GDP and nominal GDP. — Understand the labour productivity (Y/L). — Explain the decreasing marginal returns. — Understand how the economic growth rate is measured. — Understand the Economic Growth Model. Introduction Microeconomics — The study of how firms and consumers make decisions — How they interact in markets — How government policies can influence their choices — Typically study individual markets — e.g. the market for cars, or the market for avocadoes — Example of issues studied: — Impact of a carbon tax on the electricity market. — How a lack of competition in a market affect prices and output. Introduction Macroeconomics — The study of the economy (of a country) as a whole — How many different markets (e.g. labor, product, capital) interact — Examines factors affects many markets simultaneously — Example of issues studied: — Impact of the widespread adoption of computers on economic growth — Impact of a financial crisis on real output — Impact of increased government spending on the economy Introduction — The remainder of the course is about Macroeconomics. — For the rest of the semester we will learn about: — Economic growth — Unemployment — Inflation — Business Cycles — International Trade and Macroeconomics (time permitting) Is Australia so much richer than its neighbours? Gross Domestic Product (GDP) — Economists measure the size of an economy by how much is produced in that economy. — Total production (of a country) is measured by Gross Domestic Product (GDP): — The market value of — all final goods and services — newly produced during a period of time in the country Market Value — Market value of all final goods and services is the total expenditure on the G&S produced when sold in markets. — Market Value of a Good or Service is the price of that Good or Service when it is traded in markets. Market Value — Did Australia’s output increase? — Suppose in 2019, Australia produced 10 tons of Apples and 10 tons of Oranges — And in 2020, Australia produced 8 tons of Apples and 13 tons of Oranges — Was Australia’s production output higher in 2019 or 2020? — DO NOT simply adding the quantities of different goods together and compare the combined quantities. — Instead, Apples and Oranges produced must be measured in terms of market values. — For example, if Price of Apples is $4/ton in 2019 and 2020 and Price of Oranges is $2/ton in both years — Market Value of Output in 2019: in 2020: Market Value — If New Ausland produces — 4 kg of Beef — 5 loaves of Bread — The price of Beef is $3/kg — The price of Bread is $10/loaf — Then the Market Value of New Ausland’s output is (4×$3)+(5×$10)=$62. Final Goods and Services — A FINAL good or service is one purchased by the Final User. — An intermediate good or service is used in the production of other goods or services. — Whether a good or service is a final or intermediate good depends on what the buyer is purchasing it for. — For example, — a loaf of bread I buy for my breakfast is a final good. — But a similar loaf purchased by a café to make sandwiches for sale is an intermediate good. — We only count the Market Value of Final G&S in GDP to prevent double-counting. Example — Suppose a Steel Maker makes 1 ton of steel — Sells the 1 ton of steel to a Car Maker for $1000. — The Car Maker uses the steel to make a Car — Sells the car to me for $10000. — In the end of this process – the Economy has 1 more car but no more steel than before: — The economy has produced a car (final good) worth $10,000 — The value of the steel (intermediate good) is included in the value of the car. Only New Production included in GDP — GDP only include goods and services newly produced during the relevant period. — Resale of used goods or 2nd hand goods are not included. — For example: If my house was built in 2018 and I bought it in 2019 — The market value of my house is included in GDP for 2018 — But not in the GDP of 2019 — Because when I bought my house in 2019 – nothing new was created — The only thing that happened was the transfer of ownership of an existing house. — Similarly, if a car was built in 2018 and sold to the final user in 2019 — The value of the car is counted in 2018 GDP (as investment into inventory). Exercise — Peter brought a new table in 2014 for $1,000 and sold it on eBay in 2015 to Joe for $1,210. — Peter received $1,200 from the sale as eBay took a cut of $10 for its services. — How much out of these transactions contributed to the country’s 2015 GDP and why? Answer — Although Peter makes a capital gain of $200, it is NOT created by production. — What are the differences? — If a carpenter made a new Table and sold it to Peter for $1000, it is counted in GDP in 2014. Something new (table) was created. — When Peter resold the table to someone on eBay, nothing new was created other than eBay’s services ($10). Example: Solved Problem 13.1 (HGLO p 403) Example: Solved Problem 13.1 (HGLO p 403) Counts only Production made in a Specified Region GDP for Australia (for example) only includes Goods and Services produced in Australia. — Excludes — Output produced in other countries by Australian firms. — Imports from overseas sold in Australia. — Includes — Output produced in Australia by other nationalities. — Exports from the Australia to overseas. Some Subtleties in Calculating GDP — Creation or trade in Financial Assets not counted in GDP — Financial Assets are claims on ownership or future benefits — E.g. a Share is a claim on part ownership of a firm; A Bond is a claim on future repayments from the issuer A Dollar is a claim on G&S — When a Financial Asset is created or sold – no “real” good or service is created or produced — Only thing that happened is that ownership or a claim on future payment is transferred from one person to another. 3 Methods to Measure GDP How to Measure GDP 3 Equivalent Methods — Expenditure method — Adding up the expenditures on all domestically produced final G&S — Most direct way to measure GDP as Market Value of all final G&S – i.e. how much final users spent on all Final G&S — Production method — adding up the value added of all domestic producers — Value Added: — Additional Market Value (MV) a producer adds to a product. — Equals MV of Product less MV of Intermediate Goods used. — Income method — adding up the income generated from all domestic production Methods of Measuring GDP The three methods are equivalent in principal because: — The expenditure on a final product is equal to the product’s market value — A person’s expenditure on a final product is the income of some other person (otherwise where does the missing money go?) — For example: if I paid (an expenditure of) $35 for dinner at a restaurant, some of the $35 goes to — Wages of cooks and waiters — Rental income paid to owner of the premises — Interest payments to Banks — Payments to suppliers of intermediate goods (e.g. rice, pork etc) — Remainder is profit earned by restaurant owner. — A person’s income is equal to his/her value-add to the final product. — — Equivalently, sum of value-added in production must equal to the expenditure on the final good. See next example. — In reality they could be different because of data limitation and measurement errors. Measuring GDP Production/ Value added Method Exercise/Illustration: Sum of Value Added = Expenditure on Final Good — The production of a cup of espresso requires 7g of coffee beans and 3 transactions: — A farmer who grows coffee beans sells them to a wholesaler for $1 per 7g. (Assume that the farmer uses no inputs.) — The wholesaler packages and ships the beans to a café owner for $2.20 per 7g. — The café owner sells espresso for $4 per cup. Exercise (continue…) — What are the value-added of the farmer, wholesaler and café owner respectively in producing a cup of espresso? — What are the incomes of the farmer, wholesaler and café owner respectively from producing a cup of espresso? — What is the expenditure on the final good (the cup of coffee)? Answer: Output, value-added & income $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 Making coffee and services $1.5 Packaging and shipping $1.0 Growing beans $0.5 $0.0 Answer — The bean grower earns $1 income for every 7g of beans sold to the wholesaler (= his value-added). — The wholesaler earns $2.2 revenue for every 7g of beans packaged and shipped to the café. Subtracting $1 cost of the beans, she has an income of $1.2 (= her value added) — The café owner earns $4 revenue for every cup of espresso sold. Subtracting $2.2 cost of the packaged beans, he earns an income of $1.8 (= his value added) Answer — The total income generated by producing one cup of espresso = $1 + $1.2 + $1.8 = $4. — A person’s income is equal to his value-add to the final product. — The expenditure on a cup of espresso is also equal to its market value. — That is, the market value of the final product = the expenditure on it = the total income generated by its production. — If we were to sum of the output of each producer, we would have (incorrectly) included the values of intermediate G&S, not just final G&S. Other Measures of National Output and Income — Net Domestic Product — Equals the market value of all final goods and services produced (i.e. GDP) less depreciation (reduction in value) of capital equipment — Measures net production, after taking into account “wear and tear” on capital equipment (e.g. machinery, factories, office buildings). — Gross National Income — Measures income earned by domestic residents, regardless of where the income is generated (i.e. domestically or abroad). — — Not really important for this course. Economic activities not included in GDP — GDP only includes G&S traded in formal markets: — Excludes Underground/Informal Sector: E.g. trade in illicit drugs, under-table cash transactions for tax avoidance — Excludes Household Production: For example, cooking dinner for my family, cleaning my toilet, taking care of my kids on weekends are all examples of Household Production. — Underground Economy and Household Production are excluded as they are part of the unobserved economy: Shortcomings of GDP as a measure of Economic Output — In Australia, the underground economy is estimated to be ~1.5% of measured GDP — In other countries like Zimbabwe, the underground economy has been estimated to be >50% of measured GDP. — Formal GDP measures in some countries may severely underestimate the actual level of economic outputs in some countries. Circular Flow Diagram — Circular Flow Diagram is used to illustrate flow of transactions in the economy, in particular: — Payments to Households — Expenditures by Households — There are 4 main groups in the economy: — Households – basically people in the economy — Firms – that produce goods and services in private markets — Government – that provides non-market goods and services (e.g. national defence, education, law enforcement etc.) — Rest of the World – Foreigners that — buys the country’s Exports — produce the country’s Imports Measuring GDP Expenditure method Components of GDP as Expenditure — If we calculate GDP as expenditure on Final G&S produced in a country, we can divide the expenditures by the buyers: — (Private) Consumption (C) – by Households — (Private) Investment (I) – by Firms — Government Purchases (G) — Exports (X) – To foreigners overseas (Private) Consumption Expenditure, C C refers to spending by Households on — Services – such as education, legal services, medical care etc — Non-durable Goods – such as food and clothing — Durable Goods – such as cars and fridges. — Durable Goods are goods that last and continue to be useful over a long period of time. — A car can provide transportation for at least a decade if well maintained, hence is considered to be a durable good — Food on the other hand is “used up” once you eat it – so it is non-durable. (Private) Investment Expenditure, I I refers to expenditure on fixed assets that can be used to produce other G&S in the future. — Business Fixed Investment — Spending by Firms on durable fixed assets such as factories, trucks and machinery — Residential Investment — Spending by Households and firms on new Houses/Apartments/Dwellings — Houses once constructed continue to provide tradeable housing services (e.g. rental properties) for a very long time — Changes in Inventory — Inventory – stocks of goods that have been produced but not yet sold. — If a car manufacturer built $20 million worth of cars but only sold $15 million — Consumption (C) increased by $15 million. — Inventory (I) increased by $5 million — Investment as the inventory can be sold in the future – yielding a future benefit — (Also a way to account for goods made in one period but sold in another) Government Purchases, G G refers to expenditure by the government on Goods and Services such as — Public investment into infrastructure like roads and bridges — Public services such as public security and national defense — Transfer Payments (TP) — Part of government spending. — Be careful, TP is not part of Government Purchases (G) — Since TP such as disability benefits or unemployment benefits are transfer of money from some Households (thru taxes) to another without any new G&S created. Exports, X X are expenditures by overseas residents on domestically produced goods and services. — Example 1: A University education at UQ purchased by a foreign student living in Australia (for more than a year) does not count as an export. — Example 2: An Australian expat living in China buying Australian beef from a Chinese supermarket. The Beef counts as an export from Australia. Expenditure Approach to GDP — Notation: For this course: — “C” stands for private Consumption — “I” stands for private Investment — “G” stands for Government Purchases — “X” stands for Exports — “M” stands for Imports — “Y” stands for GDP (Don’t ask me why…) AD = C + I + G + (X-M) Comparing GDP Figures — Very often we are interested in comparing GDP figures of different countries or comparing a country’s GDP over time. — When we do cross-country or cross-time comparison, we have to be careful with what GDP figures we should use. — Because market prices in different countries are different. — And even in the same country prices change over time. — So which prices should we use to calculate market value? — The same is true for the comparison of GDP per capita. Nominal versus Real GDP — Nominal GDP is measured in current prices — E.g., nominal GDP in 2012 is measured using market prices from 2012). — Changes in Nominal GDP can be due to either — changes in market prices — Or changes in the quantities of G&S produced. — Real GDP is measured in constant prices. — Fixing the prices at a base year, e.g., 1996, so the real GDP in 2012 is measured in 1996 prices. — The actual method is more complicated than that. Nominal versus Real GDP — Real GDP growth is output volume growth, not output market value growth. — Market value grows due to an increase in P and/or an increase in Q. — Unless stated otherwise, GDP (in this course) always refers to “real GDP”(same for GDP per capita etc). — Because the Volume of Goods and Services produced tells us the availability of Goods and Services in the country — Growth in Real GDP over time gives us information about how well being in the country improves over time as a result of economic growth. Example Year Apples Bananas - Price Output Price Output 2000 (Base Year) $2/kg 10 $5/kg 20 2010 $3/kg 20 $10/kg 40 Suppose a country only produces Apples and Bananas. Price and output data are presented in the table above. 1. Calculate the percentage change in Nominal GDP between 2000 and 2010. %Δ89:.;
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