Cigarettes should be valued in GDP at €7.50 per pack even though €5.00 of that price is tax because the buyers paid €7.50 per pack.

Question

Quizplus · Accepted Answer

The value of a product in GDP is based on the price paid by the buyer, regardless of how much of that price is tax. So in this case, the value of a pack of cigarettes would be €7.50, not just €2.50 (the amount that is not tax).

Cigarettes Should Be Valued in GDP at €7