Company X sells sugar to company Y for $50,000.Company Y uses the sugar to make chocolate bars,selling them to consumers for $150,000.The total contribution to gross domestic product (GDP)is

Question

Quizplus · Accepted Answer

The contribution to GDP is the value added at each stage of production. In this case, the value added by company Y is the difference between the revenue they receive from selling chocolate bars ($150,000) and the cost they had for the sugar they bought ($50,000), which is $100,000. Therefore, the total contribution to GDP is $150,000 (the revenue from the sale of chocolate bars) plus $100,000 (the value added by company Y) which equals $250,000. However, we only consider the value added, which is $100,000, making D the best choice.

Company X Sells Sugar to Company Y for $50,000