Question

Suppose a miner harvests a ton of iron ore, an iron smelter turns the iron ore into steel, and a car manufacturer turns the steel into a car. If the miner adds a value of $1000, the iron smelter sells the steel for $3500, and the car manufacturer sells the car for $9000, how much has been added to GDP?

Answer 1

$9,000

Step-by-step explanation:

Data provided:

Value added by miner = $1000

Value added by iron smelter = $3500

Selling price of the car = $9000

Here,

The selling price of the car already include the values added by the miner and the iron smelter

Now,

The Addition to GDP

= Value added by miner and iron smelter + Value added by manufacturer

= $1,000 + ( $3,500 - $1,000 ) + ( $9,000 - $3,500 )

= $1,000 + $2,500 + $5,500

= $9,000