Trying to understand what counts as GDP and how it is measured. The simplest example I can think of is to imagine a fictional three person country. Person A makes and sells a widget for $10 to person B. Clearly the gross output of this countries’ economy at this time is $10. But now if Person B sells the same widget to Person C will we consider the gross output to be $12 or $22? And why? Thanks.
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GDP is calculated by the retail price when a product is produced.
So B is a regular dude and buys it at a retail price of $10, and resells it on eBay to C for $12, the GDP $10.
If B is a retail store buying it at a wholesale price of $10 and selling it in his store to C for the retail price of $12, GDP in this case is $12.
Now if B buys it retail at $10, signs it and resells it as an official collectible to C for $12, he’s added $2 of value to it with his celebrity signsture. In which case GDP is $12.
Hmm, also one more example. If A makes a product with a retail price of $12, and puts it on a shelf as extra inventory for next year, it still counts as $12 GDP even without selling it. GDP counts production, not sales.
Generally, GDP *does not* include resale of purchase goods.
That is, if you buy something and sell it second hand, that doesn’t count.
GDP is only new/first sale of a good. Now if person A sold the widget for $10, and then Person C sold a doohickey for $12 to person A who now had the money to afford it, GDP would be $22. That same $10 can count multiple times toward GDP
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