Question

In the first stage of manufacturing each final unit of a​ product, a firm purchases a...

In the first stage of manufacturing each final unit of a​ product, a firm purchases a key input at a price of

​$7per unit. The firm then pays a wage rate of ​$5 for the time that labor is​ exerted, combining an additional ​$1 of inputs for each final unit of output produced. The firm sells every unit of the product for $15.

What is the contribution of each unit of output to GDP in the current​ year?

The contribution of each unit of output to GDP in the current year is $?

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Answer #1

We need to find Value addition by firm which can be calculated as below:

Particulars Amount
Sales Price (A)             15
Input Price (B)               7
Wage rate ('C)               5
Additional Input (D)               1
Contribution of each unit of output in GDP (E=A-B-C-D)               2

Hence each unit contributes $2 in GDP of the country.

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