Scenario: the Price of a Standard Basket of Goods in Country

question 6

Multiple Choice

Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above.The difference between the GDP per capita in Country A and country B is ________.

• A) $20,000
• B) $40,000
• C) $10,000
• D) $60,000

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Definitions:

Price Elastic

A term describing how responsive the demand for a good is to a change in its price.

Total Revenue

The total amount of money generated by a business from the sale of its goods or services before any costs or expenses are deducted.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Price Inelastic

A characteristic of a good for which the demand does not significantly change with a change in its price.