economics question concerning GDP per capita

Sue0113

Junior Member
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Feb 1, 2012
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114
We generally get a better sense of the economic well being of consumers by lookingat their income on a per capita basis. Consider the following information below:

Year

Real GDP
(1996 prices)

Population

2000

$4,915,600 million

233 million

2007

$9,243,800 million

283.5 million
What is the GDP per person in the example given above? What is the growth rate (as a%)? Are people better off or worse off and why?
This is my answer:
TheGDP per person for 2000 is 21,096.9957

TheGDP per person for 2007 is 32,605.99647

100 X {(4915600/233)} -{(9243800/283.5)} / (92343800/283.5)
100 X (11509.00077/32605.99647)
100 X (.352971907)
35.2971907 %

Therefore the growth rate is 35.2971907 % I believe people are better off as both population and GDP have increased.
Is this correct?
 
We generally get a better sense of the economic well being of consumers by lookingat their income on a per capita basis. Consider the following information below:

Year

Real GDP
(1996 prices)

Population

2000

$4,915,600 million

233 million

2007

$9,243,800 million

283.5 million
What is the GDP per person in the example given above? What is the growth rate (as a%)? Are people better off or worse off and why?
This is my answer:
TheGDP per person for 2000 is 21,096.9957 Correct

TheGDP per person for 2007 is 32,605.99647 Correct

100 X {(4915600/233)} -{(9243800/283.5)} / (92343800/283.5)
100 X (11509.00077/32605.99647)
100 X (.352971907)
35.2971907 %
The above is arithmetically and conceptually wrong. If you actually do the calculation shown above you will get a negative answer, not a positive one. That is the arithmetic error. The conceptual error is that, to calculate percentage change, the base must be the starting value, not the ending value.

Therefore the growth rate is 35.2971907 % I believe people are better off as both population and GDP have increased.
Is this correct?
Your conclusion is correct, but it is based on incorrect numbers (as discussed above) and poorly expressed. People are better off because GDP has increased faster than population, or to say the same thing a different way, GDP per capita has increased.
\(\displaystyle rate\ of\ change = 100 * \dfrac{\frac{9,243,800}{283.5} - \frac{4,915,600}{233}}{\frac{4,915,600}{233}} \approx 100 * \dfrac{32,606 - 21,097}{21,097} \approx 54.5\%.\)
 
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