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A nation produces 500 units of output. It sells 400 of these to domestic consumers at a price of $2 per unit, and exports the remaining 100 units to countries overseas at a price of $2.50 per unit. The country also imports 50 units of another good at a price of $3 per unit. There is neither investment nor government expenditure in this economy. Aggregate demand for the output of this country is ______ .

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Answer:

Given :

A nation produces 500 units of output,

Sells 400 of these to domestic consumers,

Price = $2 per unit

Exports the remaining 100 units

Imports = 50 units

Price of Imports = $3 per unit.

We can compute the aggregate demand using the following formula:

Aggregate Demand = (price of commodity × Quantity sold) + (price overseas × exports)

= ($2×400) + ($2.50×100)

= 1050

∴ Aggregate demand for the output of this country is 1050

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