Carl's Computer Center sells computers to business firms. Businesses then use the computers to produce other goods and services. Over the past year, sales representatives were paid $3.5 million, $0.5 million went for rent on the building, $0.5 million went for taxes, $0.5 million was profit for Carl, and $10 million was paid for computers at the wholesale level. What was the firm's total contribution to GDP?
What will be an ideal response?
$5 million. Note that the $10 million paid for computers is not part of value added. Note also that the fact that the firm produces an intermediate good doesn't mean that it doesn't contribute to GDP.
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Which of the following transactions would be included in this year's GDP for the United States?
a. Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation. b. Deion buys a travel guide written by a Costa Rican woman living in the United States. c. Deion buys a shirt while on vacation in Costa Rica. d. Deion spends money in an American-owned restaurant in Costa Rica.
Suppose 40 percent of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60 percent of potential workers are less-skilled and contribute only $30,000 to the firm each year. Schooling costs a highly skilled worker y per year, while it costs a less-skilled worker 2y per year. What range of y will support a signaling equilibrium?
A. $0 < y < $50,000 B. $5,000 < y < $20,000 C. $10,000 < y < $20,000 D. $5,000 < y < $10,000 E. $20,000 < y < $50,000