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A farmer sells a bushel of corn to the supermarket for $12. The supermarket then sells the corn to customers for $25. What is the total contribution to GDP?
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36 votes
36 votes
A farmer sells a bushel of corn to the supermarket for $12. The supermarket then sells the corn to customers for $25. What is the total contribution to GDP?

User Wizzardz
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1 Answer

20 votes
20 votes

Answer:

$ 25

Step-by-step explanation:

As per the description, the exact amount that is being contributed from the corn bushel to the Gross Domestic Product would be $ 25. The price at which the farmer sold it to the supermarket would not be included in the GDP because it would be considered as an intermediary good because the good purchased for the resale purpose is not included in GDP as it leads to double-counting. Thus, only the price of the final good i.e. $ 25 would be included in GDP as it will now be used for final consumption by the customers.

User MatanGold
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