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21 August, 13:30

Suppose that Glitter Gulch, a gold mining firm, increased its sales revenues on newly mined gold from $10 million to $20 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

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  1. 21 August, 16:52
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    A. The real output did not change or changed by $0

    B. The real output changed by $10,000,000

    Explanation:

    First, the question is incomplete, the following is the completion

    a. 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?

    b. If the price of gold had not changed, what would have been the change in Glitter Gulch's real output? $ million.

    A) First, the real output in the question refers to the gold amount as produced by the mind.

    Sales revenue for the first year is $10,000,000 and then it doubled the next year to $20 million. Also, since the price of gold also increased by 100% over the same period, it means that it was the price increase by 100% that led to the 100% increase in sales revenue. This means that the real output of gold from the mine did not change.

    b) The Hypothetical situation where the price however remains the same, means that to achieve an 100% increase in sales revenue then the real output of Glitter Gulch changed by 100%.

    Specifically, the numerical value of the change = $20,000,000-$10,000,000 = $10,000,000
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