The production of a portable power bank involves 5 stages. The value added after the first stage of production occurs is $1.20. The sale price of the portable power bank is $2.50. Based on the above information, what amount is used to measure GDP?
A) $3.70
B) $1.20
C) $1.30
D) $2.50

Question

Quizplus · Accepted Answer

The sale price of the portable power bank is the final good/service produced and sold in the economy, therefore it is used to measure GDP. The value added of $1.20 is only a part of the production process and is already included in the final price of the product. Therefore, we only count the final sale price of $2.50 to measure GDP.

The Production of a Portable Power Bank Involves 5 Stages