Question
Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture.
Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it
to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of
leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for
$2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide
produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for
$20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced
20 couches during 2015 and sold each one during that year for $2,600. What was the
economy's GDP for 2015?
a. $25,000
b. $52,000
c. $57,000
d. $65,000
I was told the answer in C but I am not sure why? I was told you only include GDP for that year?
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