Question

Suppose U.S . Steel Sells steel to Chrysler for

$ 5 ,000 , and then this steel is used in a Voyager van that is sold to a new car dealer for $ 17,000 . The car dealer then sells the van to a family for $ 20 , 000 . n this scenario, the contribution to GDP is :

a . $ 42 ,000

b . $ 37 , 000

c . $ 20 , 000

d . $ 17,000

Answer 1

In this case, the GDP can be measured by adding the value added in all the stages of production:

1st Stage: The values added is $5000

2nd Stage: The value added is $(17000-5000) = $12000

3rd Stage: The value added is $(20000-17000)= $3000

the GDP will be the sum of value added in all stages i.e. $(5000+12000+3000)= $20000

or,

It can be done as GDP is the measure of the final goods produced in the Economy. So, the value of the final good is GDP which $20000 the amount at which the car is ultimately sold.

In both the cases the answer will be same