Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of transactions is .A. $2,300.
B. $1,200.
C. $1,100.
D. $500.

B. $1,200.

Explanation:

GDP is the total value of all the goods and services produced in a country in a period. The GDP value is calculated to show the directions of a country's economy. An increase in the GDP value indicates growth in the country's economic activities.

GDP calculation involves consideration of all the finished products in the year under review. Economists consider consumer or final goods and services only to avoid double counting. Products or services used to produce other goods and services are not counted in GDP as they will be considered in the final product. In this case, only the consumer product worth $1200 will add to the GDP. All the processes do not result in a final product. They are capital goods used in the production of the final product.

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