Question
If a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution to GDP is
a. $100.
b. $600.
c. $650.
d. $50.
e. $500.
a. $100.
b. $600.
c. $650.
d. $50.
e. $500.
Answers
GPT-4o mini
To calculate the contribution to GDP in this scenario, we consider the value of the final goods produced and sold, which is the value of the shoes.
The cobbler sells the shoes for $500, which represents the value added to the economy from producing those shoes. The costs of the leather and thread are inputs used in production and are not counted in the GDP calculation for the final goods.
Therefore, the contribution to GDP is:
**e. $500.**
The cobbler sells the shoes for $500, which represents the value added to the economy from producing those shoes. The costs of the leather and thread are inputs used in production and are not counted in the GDP calculation for the final goods.
Therefore, the contribution to GDP is:
**e. $500.**