The table given below reports the sales value at each stage ofproduction of the soft drink Pepsi. Table 5.3
Refer to Table 5.3.Compute GDP according to the income approach if Pepsi is assumed to be the only good produced in the economy.
A)$1.05
B)$0.05
C)$0.20
D)$0.60
E)$0.40

Question

The table given below reports the sales value at each stage ofproduction of the soft drink Pepsi. Table 5.3
 Refer to Table 5.3.Compute GDP according to the income approach if Pepsi is assumed to be the only good produced in the economy.
A)$1.05 
B)$0.05 
C)$0.20 
D)$0.60 
E)$0.40

Quizplus · Accepted Answer

The income approach to GDP measures the total income generated by an economy. In this case, since Pepsi is the only good produced, the income generated at each stage of production represents the value added to the final product. Therefore, GDP can be calculated as the sum of all income generated:

Wages + rent + interest + profit = $0.10 + $0.10 + $0.10 + $0.30 = $0.60

Thus, the correct answer is D) $0.60.

The Table Given Below Reports the Sales Value at Each