If a used car dealer purchases a used car for $3,000,refurbishes it,and sells it for $8,000,the
A)dealer contributes value added equal to $5,000,but nothing is added to GDP.
B)dealer contributes value added equal to $5,000,and consequently $5,000 is added to GDP.
C)dealer contributes nothing to production because only existing goods are involved.
D)dealer contributes value added equal to $8,000,but only $5,000 is added to GDP.

Question

Quizplus · Accepted Answer

The dealer contributes value added equal to the difference between the selling price ($8,000) and the purchase price ($3,000), which equals $5,000. This value is added to GDP because it represents new economic activity.

If a Used Car Dealer Purchases a Used Car for $3,000,refurbishes