Question

Howard Nets & Co. is a basketball net making company. Last year, Howard Nets & Co. had $2,000 worth of inventories (stored basketball nets). This year, they produce $115,000 worth of basketball nets and sell $114,850 worth. What is the change in Howard Nets & Co.'s inventories and how much does Howard Nets & Co. contribute to GDP this year?

Answer 1

The change in Howard Nets & Co.'s inventories is a decrease of $1,850 and they contributed $114,850 to GDP this year by their sales.

Step-by-step explanation:

The change in Howard Nets & Co.'s inventories is calculated by taking this year's ending inventory and subtracting last year's inventory. The company produced $115,000 worth of basketball nets and sold $114,850, so the ending inventory for this year would be the produced amount minus the sold amount, which equals $150 of inventory. This means that the change in inventory is $150 - $2,000 = -$1,850 (a decrease in inventory).

Next, to calculate the contribution to Gross Domestic Product (GDP), we consider the total sales. GDP measures the value of final goods and services produced over a period of time. For Howard Nets & Co., the contribution to GDP would be their sales which is $114,850 for this year.

Answer 2

$150; $115,000

Step-by-step explanation:

Given that,

Last year inventories = $2,000

Basket ball nets produce in the current year = $115,000

Basketball nets sell in the current year = $114,850

Change in inventories:

= Value of basketball nets produce - Value of basketball nets sold

= $115,000 - $114,850

= $150

GDP of a nation refers to the total production of goods and services within the boundaries of a nation in a given year.

Therefore, there is a production of basketball nets worth of $115,000 in the current year which contributes towards the calculation of GDP.