Explanation GDP is the summation of monetary value of all the goods and services that are produced by the country within its political boundary, within a financial year. Thus, it will take all the final goods and services produced in a year in the country into accounts. Here, the sheep’s wool is an intermediate commodity, which means it is a raw material, and it is turned into the final good by person B. The quantity is two and the market price of each commodity is $40. Thus, the contribution to GDP can be calculated by multiplying the final good’s quantity with the per-unit price. Option (c): The quantity of sweaters is two and the per-unit price of sweaters is $40. Thus, the contribution to GDP can be calculated by multiplying the final goods quantity with the per-unit price as follows: GDP = Quantity of goods produced × Per unit price of Good = 2 × 40 = 80 Thus, the GDP here is $80, which is equal to the value given in option ‘c’

The GDP of the economy.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN: 9781337091992

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 15, Problem 2CQQ

To determine

The GDP of the economy.

Expert Solution & Answer

Similar questions

Which of the following are included in GDP, and which are not? The cost of hospital stays The rise in life expectancy over time Child care provided by a licensed day care center Child care provided by a grandmother A used car sale A new car sale The greater variety of cheese available in supermarkets The iron that goes into the steel that goes into a refrigerator bought by a consumer.

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