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suppose that Glitter gulch a gold mining firm increased its sales revenues on newly mined gold...

suppose that Glitter gulch a gold mining firm increased its sales revenues on newly mined gold from $100 million to $200 million between one year and the next. Assuming that the price of gold increased by 100 percent over the same period by what numerical amount did Glitter Gulch's real output change? If the price of gold had not changed what would have been the change in Glitter Gulch's real output?

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Answer #1

As there is a two times increase in the price and the revenue between year one and two, this indicates that same amount of gold is being sold and mined by the company over the period. The change in real output is zero.

If there is no change in the price and the revenue doubles, then the gold selling and mining must have been doubled. The change in real out is given as $100 million i.e. [($200 million (new revenue)- $100 million (old revenue)].

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