Question

Stan has a summer beach cottage that he has owned for many years. The cottage is valued at $ 125 comma 000. This​ year, Stan spends ​$250 on paint and ​$600 on​ trees, and then paints the exterior of the cottage and plants the trees himself. If he had hired a professional​ painter, it would have cost ​$1 comma 000 to paint the cottage​ (not including the cost of​ paint), and if he had hired a professional​ landscaper, it would have cost ​$450 ​(not including the cost of the​ trees) to do the planting. How much does Stan​'s improvements to the cottage add to GDP this​ year?

Answer 1

Answer:

Case 1. $850

Case 2. $2.300

Explanation:

• Improvement in cottage would cost (250 + 600) = 850. So, increase in GDP is 850.

• If he actually hired the painter total cost would be (1.000 + 250 + 450 + 600) = 2.300. So, increase in GDP is 2.300