If a Local Shop Buys a Used Motorcycle for $1,000

question 101

Multiple Choice

If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the

• A) shop contributes value added equal to $1,500, but nothing is added to GDP.
• B) shop contributes value added equal to $1,500, and consequently $1,500 is added to GDP.
• C) shop contributes nothing to production because only existing goods are involved.
• D) shop contributes value added equal to $2,500, but only $1,500 is added to GDP.

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Definitions:

Talking

The act of engaging in spoken communication to convey messages, information, or express thoughts and emotions.

Communicating

The process of exchanging information, ideas, feelings, and messages between individuals or groups, often through a common system of signs, behaviors, or devices.

False Consensus Effect

The cognitive bias whereby people overestimate how much others share their beliefs, attitudes, and behaviors.

Anchor

A key piece of information used as a reference point for decision-making or assessment, often in negotiations or estimations.