When a firm produces output,
A) The value of the output produced is included in GDP
B) The firm's output contributes to GDP only to the extent that there is value-added.
C) The firm's output will not count as GDP if it is stored as inventory.
D) The firm's output will not count as GDP if it is exported.

Question

Quizplus · Accepted Answer

The contribution of a firm's output to GDP is measured by the value it adds to the final product. This value-added is obtained by subtracting the cost of inputs from the price of the final product. Therefore, only the value-added by the firm is included in GDP, not the entire value of output produced. Additionally, inventory is not counted in GDP until it is sold, and exports are not counted in domestic GDP.

When a Firm Produces Output