The table shows some data for an island economy which produces only haircuts and

Question

The table shows some data for an island economy which produces only haircuts and iTunes. The base year is 2015. Calculate the value of 2016 production in 2015 prices and the percentage increase in production when valued at 2015 prices In 2015 Item Haircuts iTunes Quantity 98 57 Price $6 each $7 each The value of 2016 production in 2015 prices s In 2016 Item Haircuts iTunes The percentage increase in production when valued at 2015 prices is percent. >>> Answer to 1 decimal place. Quantity 115 70 Price $5 each $3 each

Explanation / Answer

(Image 1)

(1)

2016 production at 2015 prices ($) = 115 x 6 + 70 x 7 = 690 + 490 = 1,180

(2)

2015 production at 2015 prices ($) = 98 x 6 + 57 x 7 = 588 + 399 = 987

% Increase in production when valued at 2015 prices = ($1,180 / $987) - 1 = 1.196 - 1 = 0.196 = 19.6%

(Image - 2)

(1)

2015 production at 2016 prices ($) = 95 x 10 + 55 x 5 = 950 + 275 = 1,225

(2)

2015 production at 2015 prices ($) = 95 x 8 + 55 x 6 = 760 + 300 = 1,090

% Increase in production when valued at 2015 prices = ($1,225 / $1,090) - 1 = 1.124 - 1 = 0.124 = 12.4%

NOTE: As per Chegg answering guidelines, first 2 independent questions are answered.

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