A set of tires installed on a vehicle in an automobile factory is counted as:
A) a final good and its market price is part of GDP.
B) a final good and its market price is not part of GDP.
C) an intermediate good and its market price is part of GDP.
D) an intermediate good and its market price is not part of GDP.

Question

Quizplus · Accepted Answer

Tires installed on a vehicle in a factory are considered intermediate goods because they are used in the production of the final good, which is the vehicle. Their market price is not counted separately in GDP to avoid double counting, as the value of the tires is included in the final price of the vehicle.

A Set of Tires Installed on a Vehicle in an Automobile