If equipment is fully tradable, so that the price in Kenyan shillings (KSh) equals the price in pounds times the market exchange rate, what is the market exchange rate? Based on its relative price, does it appear that food is tradable? Is it more or less expensive in Kenya, compared to the UK? Fill in the table above (ignoring cells with "-"). What is the UK's total GDP in GBP? What is Kenya's total GDP in KSh?
If equipment is fully tradable, so that the price in Kenyan shillings (KSh) equals the price in pounds times the market exchange rate, what is the market exchange rate? Based on its relative price, does it appear that food is tradable? Is it more or less expensive in Kenya, compared to the UK? Fill in the table above (ignoring cells with "-"). What is the UK's total GDP in GBP? What is Kenya's total GDP in KSh?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 24RQ: What is a production technology?
Related questions
Question
![United Kingdom
Kenya
Price per
Value of
Value of
unit (GBP) output
Оuаntity
Price per
Quantity
unit (KSh)
output
(GBP)
(KSh)
5000 per
75
650,000
Equipment
(millions of
500
unit
units)
Food
500
10 per kg
125
750
(millions of
kg)
Total GDP
(local
currency)
a. If equipment is fully tradable, so that the price in Kenyan shillings (KSh) equals the price
in pounds times the market exchange rate, what is the market exchange rate?
b. Based on its relative price, does it appear that food is tradable? Is it more or less
expensive in Kenya, compared to the UK?
c. Fill in the table above (ignoring cells with "-"). What is the UK's total GDP in GBP?
What is Kenya's total GDP in KSh?
d. What is Kenya's GDP in GBP at market exchange rates?
e. Following the calculations on pp 28-29 of ED, what is Kenya's GDP in pounds
calculated by using UK prices for each individual product and applying that price to
Kenya's quantities (that is, using purchasing power parity [PPP])?
f. Is the value you calculated in part d higher or lower than what you calculated in part c?
Give a one sentence explanation of why this is.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd1d857bc-14a0-42a9-b925-816e2f54ce12%2F8f686191-c499-4a2f-bda6-7d5f2e072823%2Flebsaa_processed.jpeg&w=3840&q=75)
Transcribed Image Text:United Kingdom
Kenya
Price per
Value of
Value of
unit (GBP) output
Оuаntity
Price per
Quantity
unit (KSh)
output
(GBP)
(KSh)
5000 per
75
650,000
Equipment
(millions of
500
unit
units)
Food
500
10 per kg
125
750
(millions of
kg)
Total GDP
(local
currency)
a. If equipment is fully tradable, so that the price in Kenyan shillings (KSh) equals the price
in pounds times the market exchange rate, what is the market exchange rate?
b. Based on its relative price, does it appear that food is tradable? Is it more or less
expensive in Kenya, compared to the UK?
c. Fill in the table above (ignoring cells with "-"). What is the UK's total GDP in GBP?
What is Kenya's total GDP in KSh?
d. What is Kenya's GDP in GBP at market exchange rates?
e. Following the calculations on pp 28-29 of ED, what is Kenya's GDP in pounds
calculated by using UK prices for each individual product and applying that price to
Kenya's quantities (that is, using purchasing power parity [PPP])?
f. Is the value you calculated in part d higher or lower than what you calculated in part c?
Give a one sentence explanation of why this is.
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