In 2010, Janice Quinn sells a five-year-old car to Used Car, Inc. for $3,000. In the same year, Used Car, Inc. resells the car to Hilda Quinn Goner for $3,500. What is the contribution of these transactions to GDP in the year 2010?

Question

Quizplus · Accepted Answer

Only the sale from Used Car, Inc. to Hilda Quinn Goner contributes to GDP in the year 2010, as it represents a final sale of a good or service. The sale from Janice Quinn to Used Car, Inc. does not contribute to GDP since it is an intermediate transaction that does not involve a new production of a good or service. Therefore, the contribution to GDP is the difference between the sale price to Hilda Quinn Goner ($3,500) and the initial purchase price from Janice Quinn ($3,000), which is $500.

In 2010, Janice Quinn Sells a Five-Year-Old Car to Used