Question

Which of the following activities of a computer manufacturer during the current year are included in this year's measure of GDP?

a. The manufacturer produces a chip in June, uses it as a component in a computer in August, and sells the computer to a customer in November.

b. A retail outlet of the firm sells a computer completely built during the current year.

c. A marketing arm of the company receives fee income during the current year when a buyer of one of its computers elects to use the computer manufacturer as her Internet service provider.

Short answer

Option b and c are included in this year's measure of GDP

Step-by-step solution

   Introduction

The total monetary worth of all final goods and services produced within a nation's territorial boundaries in a given period is known as GDP.

    Explanation of option a

a)

Because the chip bought by the computer manufacturer is regarded intermediate consumption of goods and services in the computer's final creation. GDP in a given year is defined as the ultimate value of the computer sold minus the intermediate consumption value. Because the product has yet to meet its customer, the eventual buyer will pay the product's final value in this production-based GDP calculation process.

The sale of a chip created in June is not included in the GDP because it is an intermediary good.

And the November sale is only factored into the current-year GDP calculation.

Finally, in November, the activity of selling a computer to a customer is included in GDP.

    Explanation of option b

b)

Because this is a sale of finished goods, the sale of the computer is factored into the GDP calculation for the current year. When a retail outlet buys a product and then sells it to a customer, the total value of goods and services sold to the customer minus the cost of buying the computer from the manufacturer is considered an activity for GDP purposes. The value of the producer's selling price to the retailer, on the other hand, will be regarded the intermediate purchasing price, in order to resell the final product to the consumer at a greater value. As a result, the activity is counted as part of GDP.

    Explanation of option c

c)

A marketing firm provides marketing services to a client, and the amount received represents a sale of the final output (service); as a result, this sale is included in the current year's GDP calculation.

As a result, the activity is counted as part of GDP.