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 GDP is:

Answer 1

The impact of these transaction on GDP is $45,000

Step-by-step explanation:

Solution

Given that

The Gross domestic product will include the $20,000 which is the money is spent by people on the roadside stand, and the $25,000 which was paid by the consumers directly. In total the GDP will increase by $45,000. this is true because GDP will add only the final value of goods and services.

Note: $20,000 + $25,000 = $45,000