What is the GDP of this situtation?

The American Paper Co. produces $1 million worth of paper and sells it to the College Book Corp. The College Book Corp. prints 100,000 copies of an economics textbook for which it paid an economics professor $500,000 to write. The College Book Corp. sold the textbooks to college bookstores nationwide for $3 million. The college bookstores received $4 million from students in exchange for the books.

1. What is the total contribution to GDP from the above

events?

a. $8.5 million

b. $5.5 million

c. $3 million

d. $4 million

2. Which statement(s) concerning the production of paper is

true?

I. The $1 million in paper is an input of the production of

the textbook.

II. The $1 million in paper is an intermediate good.

III. To include both the $1 million in paper in GDP and

the $4 million value of the textbooks would constitute

double counting and would result in an inaccurate

measure of GDP.

Thanks

What is the GDP of this situtation?

What is the GDP of this situtation?

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