Question

Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The impact of these transactions on gross domestic product (GDP) is?

Answer 1

Josh bought a total of 1800 grams of fruit at the farmer's market, after converting the weights of oranges, grapes, and apples into grams.

Step-by-step explanation:

To calculate the total weight of the fruit that Josh bought at the farmer's market, we need to convert all quantities into the same unit, which will be grams in this case. Josh bought 1.5 kilograms of oranges, 150 grams of grapes, and 15,000 centigrams of apples.

• 1.5 kilograms of oranges = 1500 grams
• 150 grams of grapes = 150 grams
• 15,000 centigrams of apples = 150 grams

We add these amounts together to get the total grams of fruit Josh bought:

1500 grams (oranges) + 150 grams (grapes) + 150 grams (apples) = 1800 grams

Therefore, Josh bought a total of 1800 grams of fruit.

Answer 2

These transactions will cause the GDP to increase by $45,000.

Step-by-step explanation:

The GDP or gross domestic product of the nation includes the value of final goods and services produced within the geographical boundaries of a nation in a given period of time.

So GDP does not include the value of intermediate goods.

In the given example, the $20,000 worth of oranges sold to people is final good. While oranges sold to make orange juice is an intermediate good. The orange juice sold directly to consumers is the final good.

Increase in GDP

= $20,000 + $25,000

= $45,000