Company X sells leather to company Y for $60,000.Company Y uses the leather to make shoes,selling them to consumers for $180,000.The total contribution to GDP is:
A) $240,000.
B) $180,000.
C) $60,000.
D) $120,000.
E) $30,000.

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 selling price of the shoes ($180,000) and the cost of the leather ($60,000). 
So, the value added by company Y is $120,000. Therefore, the total contribution to GDP is $120,000.

Company X Sells Leather to Company Y for $60,000