Suppose a particular model of smartphone contains $150 worth of raw materials and requires $175 worth of labor to produce.One day,one of these phones sells for $400.The seller would have been willing to sell it for as little as $375,whereas the buyer would have been willing to pay as much as $425.Which dollar amount would be used to calculate this transaction's contribution to gross domestic product (GDP)?
A) $150
B) $175
C) $375
D) $400
E) $425

Question

Quizplus · Accepted Answer

GDP includes the final selling price of a good or service, which in this case is $400. The costs of production (raw materials and labor) are not used to calculate the contribution to GDP. The buyer and seller's willingness to pay and sell at certain prices do not affect the GDP calculation.

Suppose a Particular Model of Smartphone Contains $150 Worth of Raw