Stage of production Frm A Frm B Firm C FrmD Frm E Sales value of product $1600 2

Question

Stage of production Frm A Frm B Firm C FrmD Frm E Sales value of product $1600 2500 5200 7000 Given data above on the various stages of production of a product produced by firms A thru E. Assume firm A buys no intermediate product from a previous stage of production. Firm E sells to the final purchaser If the contribution to GDP of A-E were counted by counting only the final sale (but not resale), the contribution would be Select one: a. $7600 O b. $20,600 C. $1600 O d. None of the above Next page

Explanation / Answer

Contribution = (1600 - 0) + (2500 - 1600) + (3700 - 2500) + (5200 - 3700) + (7600 - 5200)

Final value - Intermediate value = Contribution

Contribution = 1600 + 900 + 1200 + 1500 + 2400 = $ 7600

Answer is a) $ 7600

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