A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. How will the 200,000 unsold DVDs be treated in the GDP statistics?

Question

Business

Broderick Davidson

21 January, 20:56

A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. How will the 200,000 unsold DVDs be treated in the GDP statistics?

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Answers (1)

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Ann Rivera · Answer 1

C. The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP.

Explanation:

GDP which is the gross domestic product is defined as the sum of all final goods produced in a country during a specific period of time, say one year. Thus, since it was 500,000 DVD that were produced as the final goods, the 200,000 not sold in the second quarter will be included as change in inventory in the second quarter rather than sales. This falls under the category of in investment in the GDP analysis.