How much does the production of a kayak add to GDP if the shell costs $250, the paint costs $20, the finisher costs $35, the manufacturer sells it to the dealer for $500, and the dealer sells it to her customer for $800?
A) $1,605
B) $1,300
C) $500
D) $305
E) $800

Question

Quizplus · Accepted Answer

GDP measures the market value of all final goods and services produced within a country in a given period. In this case, the final sale price of the kayak to the customer is $800, which is the value added to the GDP. The intermediate costs (shell, paint, finisher) and the sale from manufacturer to dealer are not counted separately in GDP to avoid double counting.

How Much Does the Production of a Kayak Add to GDP