Question

Fine Edge manufactures lawn mowers. At the end of 2014 it had $2 million worth of lawn mowers in inventory. In 2015 it sold $10 million worth of lawn mowers to consumers and had $1 million worth of lawn mowers remaining in inventory at the end of the year. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

Answer 1

production = 9,000,000

Step-by-step explanation:

Using the inventory identity we can solve for production:

Beginning + Production = Ending + COGS

end of 2014 = beginning of 2015

2,000,000 + production = 1,000,000 + 10,000,000

production = 1,000,000 + 10,000,000 - 2,000,000 = 9,000,000

production = 9,000,000