Emily is a writer,and uses her tablet computer to write a 500-page novel that she sells to a publishing company for $500,000.If the publisher prints 1 million copies that sell for $25 each,what is the contribution to GDP of Emily's novel?
A)$25 million
B)$20 million
C)$500,000
D)$50,000

Question

Quizplus · Accepted Answer

The contribution to GDP can be calculated by adding up the value added at each stage of production. Emily's novel contributes $500,000 to GDP as the final product, but the total value added is much greater when we consider the printing, distribution, and sale of the book. Assuming that the publishing company pays for printing and distribution costs out of their revenue, $25 per book represents the value added by the publisher. Therefore, the total value added is $25 million (1 million copies sold x $25 per book), and Emily's novel contributes to this total.

Emily Is a Writer,and Uses Her Tablet Computer to Write