United KingdomKenyaPrice perValue ofValue ofunit (GBP) outputОuаntityPrice perQuantityunit (KSh)output(GBP)(KSh)5000 per75650,000Equipment(millions of500unitunits)Food50010 per kg125750(millions ofkg)Total GDP(localcurrency)a. If equipment is fully tradable, so that the price in Kenyan shillings (KSh) equals the pricein 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 lessexpensive 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 poundscalculated by using UK prices for each individual product and applying that price toKenya'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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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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