The Following Table Contains Prices and Quantities for the Three

question 98

Multiple Choice

The following table contains prices and quantities for the three goods produced in the country of Linfieldia.

-Refer to the table above.Assuming that 2015 is the base year,what is nominal GDP for 2016?

• A) $5,120
• B) $5,450
• C) $5,900
• D) $6,330

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its revenues, indicating the proportion of fixed costs in the company's cost structure.

Contribution Format Income Statement

An income statement format that separates fixed costs from variable costs, thus showing the contribution margin.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales, indicating how revenue growth translates into growth in operating income.

Variable Expenses

Costs that change in proportion to the level of business activity or production volume.