Question

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer’s inventory. How much is added to GDP?

Answer 1

The amount added to the GDP is $17000.

Step-by-step explanation:

The value added to the GDP = number of tires sold×selling price of 1 tire + number of tires unsold ×cost price of 1 tire

= 300 ×$50 + 100×$20

= $15000 + $2000

= $17000

Therefore, the amount added to the GDP is $17000.