Question

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer’s inventory. How much is added to GDP? a. $8,000 b. $15,000 c. $13,000 d. $17,000

Answer 1

Answer:

The amount of $15,000 will be added to the GDP.

Explanation:

GDP or gross domestic product can be described as the measure of all final goods and services produced in the geographical boundaries of a nation in a given period, often in a year.

Since, in the calculation of GDP only final goods and services are included,

So, the GDP will increase by total value of final goods produced

Total value of final goods

=Price*quantity of goods

=$50*300

= $15000