Here is Mrs. Baker's revenue and expenses for 2014:
Revenue from sale of bread = $65,000
Cost of materials (such as sugar, yeast, baking soda, etc.) = $15,000
Wages paid = $20,000
Rent paid = $10,000
Mrs. Baker's contribution to the 2014 GDP was what?
I'm confused because I'm not sure if the intermediate good would count in Mrs. Baker's contribution per say. I'm guessing it's either 50,000 or 65,000, but I'm not sure which.
To determine Mrs. Baker's contribution to the 2014 GDP, we need to understand what GDP measures. GDP, or Gross Domestic Product, is the total value of all final goods and services produced within a country's borders during a specific time period.
In this case, Mrs. Baker's revenue from the sale of bread should be counted towards GDP since it represents the final value of the bread produced. However, the cost of materials used in the bread production should not be counted because they are considered intermediate goods, which means they are used in the production process but not sold as final products.
Therefore, Mrs. Baker's contribution to the 2014 GDP is $65,000 (the revenue from the sale of bread). The cost of materials, wages paid, and rent do not directly contribute to GDP.