Question

For each of the listed transactions enter a numerical value to indicate the contribution to GDP. If the transaction does not affect GDP then enter the number zero (0).

Edna buys an old bookcase for $200. She fixes it up and sells it in her antique shop for $500.
$_____
Mark pays $500 for the avocados he will use in the daily special fish dinner at his restaurant.
$_____
Mary pays $40 for the fish she will serve her family for dinner.
$_____
General Motors produces 10 trucks at a cost of $15,000 each. They sell 8 trucks to consumers for $20,000.
$_____
Bob receives his social security check from the government for $4,000.
$_____

Answer 1

The contributions to GDP for each transaction are: $300, $0, $0, $0, and $10,000.

Step-by-step explanation:

The transactions can be categorized based on whether they contribute to GDP or not:

1. Edna buying the old bookcase and fixing it up does not contribute to GDP, as it is a second-hand transaction. So, the contribution to GDP is 0.
2. When Edna sells the fixed-up bookcase in her antique shop, it contributes to GDP. The contribution to GDP is $500 - $200 = $300.
3. Mark paying $500 for avocados for his restaurant does not directly contribute to GDP, as it is an intermediate transaction. So, the contribution to GDP is 0.
4. Mary paying $40 for fish for her family dinner does not contribute to GDP, as it is a personal consumption transaction. So, the contribution to GDP is 0.
5. General Motors producing 10 trucks at a cost of $15,000 each contributes to GDP. The total production value is 10 trucks x $15,000 = $150,000. However, only 8 trucks are sold to consumers for $20,000 each, so the contribution to GDP is $20,000 x 8 - $150,000 = $10,000.
6. Bob receiving his social security check does not contribute to GDP, as it is a transfer payment. So, the contribution to GDP is 0.