Suppose That Nova Scotia Produces Cheese and Fish

question 138

Multiple Choice

Suppose that Nova Scotia produces cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2006, the base year, the price of cheese was $10 per unit, and the price of fish was $75 per unit. What can we conclude?

• A)Nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5
• B)Nominal GDP is $500, real GDP is $800, and the GDP deflator is 160
• C)Nominal GDP is $800, real GDP is $500, and the GDP deflator is 160
• D)Nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5

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Definitions:

Highly Contested

Describes a situation, item, or issue that is the subject of intense competition or dispute among parties.

Price Searchers

Firms or individuals that have the flexibility to set their prices because they offer unique products or services and face little to no direct competition.

Entry Barriers

Impediments that make it difficult for new participants to enter a specific industry or business field.

Monopolistic Competition

A term often used by economists to describe markets characterized by a large number of sellers that supply differentiated products to a market with low barriers to entry. Essentially, it is an alternative term for a competitive price-searcher market.