One bag of oranges is sold for $6.00 to a company that turns them into juice which is sold to consumers for $12.00. Another bag of oranges is purchased by a grocery store for $6.00 who then sells it to a consumer for $7. Taking these four transactions into account, how much is added to GDP?

Question

Quizplus · Accepted Answer

Only the final transaction of selling the bag of oranges to the consumer for $7 adds to GDP as it represents a final good or service being exchanged for money. The intermediate transactions of purchasing the oranges and turning them into juice do not add to GDP as they are not final goods or services. Therefore, only $1 (the difference between the purchase price and selling price at the grocery store) is added to GDP.

One Bag of Oranges Is Sold for $6