Which of the following item will be added to the final value of GDP in a country?

Question

BlackTom AI · Accepted Answer

First, consider what GDP aims to measure: the total market value of all final goods and services produced within a country in a given period. Now let's examine each option in that context.
Option A: These rubbers are made into tyres which are sold to a car plant for £7,800. This is an intermediate good being used to produce a final product (the car). Including this sale would risk double-counting because the value of the rubber becomes part of the car’s final price when sold to consumers. Therefore, this transaction does not add to GDP as a separate final good or service.
Option B: The car plant uses the rubber tyres to manufacture cars which are sold to consumers for £12,475. Here, the cars sold to consumers are final goods. The price £12,475 represents the value of a finished product delivered to the end user, so this transaction adds to GDP as a final good. Note how GDP would include the value of the final car, which already incorporates the input costs, without counting the tyres separately as intermediate goods.
Option C: A 1200kg of latex used in making rubber sold to a factory for £5,000. This is clearly an input (intermediate good) used in production. Since it is not a final good or service sold to the final user, it should not be added separately to GDP.
Option D: A crate of scrap metal sold to a steel producing factory for £600. This is another input into production, not a final good or service consumed or used by the end user. Unless the scrap metal itself is a final product sold to a final consumer, it does not directly add to measured GDP.
In summary, the only transaction that represents a final purchase by the end user and thus contributes to GDP as a final good is Option B.

Which of the following item will be added to the final value of GDP in a country?Single choice

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