A company produces a computer.It pays $100 for the keyboard and outer case,$200 for the internal hardware,and $100 for the software.It sells the computer to a consumer for $500.The contribution to gross domestic product (GDP)is
A) $400.
B) $500.
C) $100.
D) $900.
E) $800.

Question

Quizplus · Accepted Answer

The contribution to GDP is the value added by each stage of production. In this case, the value added for the company is the selling price of the computer ($500) minus the cost of inputs ($100+$200+$100), which equals $100. Therefore, the contribution to GDP is $500 (the selling price of the computer).

A Company Produces a Computer