Which of the following goods is directly counted in GDP? Select one:
Select one:
a. the lettuce that Subway purchases for its sandwiches
b. the bread that Subway purchases for its sandwiches
c. a 12 inch Subway sandwich purchased by a student
d. the plastic bags that Subway purchases to wrap its sandwiches
e. none of the above
The Correct Answer and Explanation is :
The correct answer is:
c. a 12 inch Subway sandwich purchased by a student
Explanation:
Gross Domestic Product (GDP) measures the market value of all final goods and services produced within a country in a specific period. A key concept in GDP calculation is the distinction between final goods and intermediate goods. Final goods are those that are consumed by the end user, whereas intermediate goods are used as inputs in the production of other goods and are not counted directly in GDP.
- Option a (lettuce purchased by Subway) and option b (bread purchased by Subway) are examples of intermediate goods. Subway uses these items as ingredients to make sandwiches. Since these are not final consumer goods but rather inputs into another product, they are not directly counted in GDP to avoid double counting.
- Option c (a 12 inch Subway sandwich purchased by a student) is an example of a final good. The sandwich is sold directly to the consumer for consumption and is not intended for further production or resale. Therefore, its full retail value is included in GDP calculations.
- Option d (plastic bags purchased by Subway), similar to the lettuce and bread, are intermediate goods used in the presentation or delivery of the final product (the sandwich). These too are not directly counted in GDP as they are part of the operational costs and not final consumption goods.
Thus, only the purchase of the Subway sandwich by a consumer (option c) directly contributes to GDP as a final good.
To illustrate this concept, let’s create an image that visually represents how final goods like a sandwich contribute to GDP, while intermediate goods do not.
Here’s an educational illustration that explains how final goods, like a Subway sandwich, are directly counted in GDP, while intermediate goods, such as the ingredients used to make the sandwich, are not included to avoid double counting. This image should help visualize the difference in how various items contribute to GDP calculations.
