How Yan's House Adventure Contributed to GDP Last Year
(a) What was Yan's house's contribution to GDP last year?
Based on the information provided, was any GDP created?
(b) How much GDP has been created if Yan hired Gonzo Real Estate to sell her house?
What was the value added to GDP in this scenario?
(c) How much GDP has been created if Yan sold the house to Gonzo Real Estate first before selling it to Yuri?
What was the total value added to GDP in this case?
Answers:
(a) The contribution to GDP in part (a) is $0, as no GDP was created without real estate agents or lawyers involved in the house sale.
(b) The value added to GDP in part (b) is $20,000 if Yan hired Gonzo Real Estate, with a 5% commission on the sale.
(c) The total value added to GDP in part (c) is $100,000 if Yan first sells the house to Gonzo Real Estate for $375,000 and then to Yuri for $400,000.
Yan's house adventure last year involved purchasing a pre-existing house, remodeling the kitchen, building a deck, and eventually selling the house to Yuri. The impact of these transactions on GDP can vary depending on the involvement of real estate agents or lawyers.
In scenario (a), where there were no real estate agents or lawyers involved in the house sale, the contribution to GDP was $0. However, in scenario (b) where Yan hired Gonzo Real Estate and a 5% commission was paid, the GDP was positively impacted by $20,000.
Lastly, in scenario (c) where Yan sold the house to Gonzo Real Estate first before selling it to Yuri, the total value added to GDP was $100,000. This shows how different sales processes can affect GDP in various ways.