Questions: Let's say the paper producer created 10 million in paper, which it then sold to the bookmaker, who used that paper to produce 80 million in books. In this case, which is true? The paper is an intermediate good and the books are a final good. Perfect! Since the paper is an input into the production of books, it's an intermediate good. The books themselves are the final good. So how much would we count in our nation's GDP? 80 million (the value of the books only) 90 million (10 million paper + 80 million books)

The answer is the first one: \$80 million (the value of the books only).

Explanation:

1. Intermediate Goods vs. Final Goods:

   • Intermediate goods are products used as inputs in the production of other goods. In this scenario, the paper is an intermediate good because it is used to produce books.
   • Final goods are products that are consumed by the end user and are not used to produce other goods. Here, the books are the final goods.

2. GDP Calculation:

   • GDP (Gross Domestic Product) measures the total value of all final goods and services produced within a country in a given period.
   • To avoid double counting, only the value of final goods is included in GDP. Intermediate goods are not counted separately because their value is already embedded in the final goods.

3. Application to the Scenario:

   • The paper, valued at \$10 million, is an intermediate good and is not counted separately in GDP.
   • The books, valued at \$80 million, are the final goods and their value is included in GDP.

Therefore, the correct amount to count in the nation's GDP is \$80 million, which is the value of the books only.