Final answer:
Tires made by an automobile factory are considered intermediate goods if they are used in the production of new automobiles within the factory. Their value is included in the final product, and thus, they are not counted separately in GDP calculations. Tires sold directly to consumers as replacements would be considered finished goods.
Step-by-step explanation:
When considering if tires made by an automobile factory are counted as a finished good or an intermediate good, it is essential to understand their use in the context of the final product. In the Gross Domestic Product (GDP) calculations, government statisticians count only the value of final goods and services that are sold for consumption, investment, government, and trade purposes. Intermediate goods, which are used in the production of other goods and not sold directly to the end consumers, are excluded from GDP calculations to avoid overstating the size of the economy.
If tires are sold as replacements directly to consumers, they would be considered a finished good. However, if the tires are being used as components in the production of new automobiles at the factory, they would be regarded as intermediate goods. Their value is captured in the final product, the automobile in this case, which is included in the GDP.