Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:
$$\begin{array} { | l | c | r | }
\hline { \text { Name of Campany } } & \text { Revenues } & \text { Cast af Pur chased Inguts } \
\hline \text { Citrus Growers Irc. } & \$ 0.75 & \mathbf { 0 } \
\hline \text { Florida Jarn Cormparty } & \$ 2.00 & \$ 0.75 \
\hline \text { The Comer Store } & \$ 2.50 & \$ 2.00 \
\hline
\end{array}$$ If the corn was grown and the jar of popcorn produced in the year 2017, but the jar was sold at Friendly Groceries in the year 2018, what is the contribution of these transactions to GDP in the year 2018?

Question

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  
$$\begin{array} { | l | c | r | } 
\hline { \text { Name of Campany } } & \text { Revenues } & \text { Cast af Pur chased Inguts } \
\hline \text { Citrus Growers Irc. } & \$ 0.75 & \mathbf { 0 } \
\hline \text { Florida Jarn Cormparty } & \$ 2.00 & \$ 0.75 \
\hline \text { The Comer Store } & \$ 2.50 & \$ 2.00 \
\hline
\end{array}$$ If the corn was grown and the jar of popcorn produced in the year 2017, but the jar was sold at Friendly Groceries in the year 2018, what is the contribution of these transactions to GDP in the year 2018?

Quizplus · Accepted Answer

The contribution to GDP in 2018 is the value added by the final sale at Friendly Groceries, which is $2.50 (The Corner Store's revenue) minus $2.00 (cost of purchased inputs), resulting in $0.50. However, the question asks for the total contribution, which is the final sale price of $2.50 minus the initial input cost of $0.75, resulting in $1.50.

Suppose a Jar of DeLux Popcorn That Is Ultimately Sold