A steel company sells some steel to a bicycle company for $100. The bicycle company uses the steel to produce a bicycle, which it sells for $200. Taken together, these two transactions contribute

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A steel company sells some steel to a bicycle company for $100. The bicycle company uses the steel to produce a bicycle, which it sells for $200. Taken together, these two transactions contribute

$100 to GDP.

$200 to GDP.

between $200 and $300 to GDP.

$300 to GDP.

Answer: $200 to GDP

Explanation:

The GDP (gross domestic product) of a country is the monetary value of all the finished goods and services produced in a country within a specific period. from the question the finished good is the Bicycle produced by the bicycle company and sold at $200. hence the transactions involving the sale of steel to a bicycle company and the use of the steel by the company to produce a finished good (bicycle) contributes $200 to the country's GDP. in simple words the GDP of a country measures the economic output of a country in its own local currency. the bicycle produced is a finished good and can be sold to a local buyer or an international buyer. the steel is not a pure raw material in its ranks but it not a finished good as well so we can't consider its sale as a sale of a finished good therefore we do not consider its sale as a contribution to the country's GDP