J
John H
Member
In a simple closed economy.
Sales = £1 million
Buy raw materials = £400,000
Electricity costs = £100,000
Depreciation of capital equipment = £200,000
Contribution to GDP via the output method is:
Sales - costs of intermediate goods = 1 million - 400,000 = 600,000
The answer is £500,000, so obviously deducts electricity costs but why? Electricity is not an intermediate good is it?
Can anyone shed some light on this??
Sales = £1 million
Buy raw materials = £400,000
Electricity costs = £100,000
Depreciation of capital equipment = £200,000
Contribution to GDP via the output method is:
Sales - costs of intermediate goods = 1 million - 400,000 = 600,000
The answer is £500,000, so obviously deducts electricity costs but why? Electricity is not an intermediate good is it?
Can anyone shed some light on this??