  Someone Who Understands Macroeconomics Please Help Me The market price for a hostel room in the capital of Iceland (I can't spell it right now) is $50 per person per night. In other words, a single room for two people per night in one of these glorified homeless shelters costs about as much as a room at a reasonable hotel in almost any city in the United States.
So everything is really expensive in Iceland. That makes sense. Consumable natural resources are pretty scarce, and external trade is very costly. This is all intuitive. What I don't understand is how the people there manage such a high standard of living. It seems that if an entire national economy is grounded on such harsh conditions, then things should be expensive but people should be poor. The alternative is that the people are very productive and make all sorts of stuff that they can export for other products and services that thery can't produce at home.
The example I'm thinking of is Japan. Stuff there is exoribtantly expensive, and the people there have very high standards of living. But this makes sense to me because Japan is a insanely productive country. What on earth does Iceland produce them that allows them to afford a high standard of living while still making things so expensive?? ? 
