Answer:
The answer is $1,500,000
Explanation:
There are three methods of calculating GDP(total market value of all the goods and services produced within a country during a given period of time usually a year):
1. Income approach
2. Expenditure approach
3. Value added approach.
In the question above, the method used is a value added approach.
Value added approach is adding all the value added during the production and distribution.
In this question, Birmingham Steel sells sold to Winston Golf Club manufacturer for $300,000. We first consider this amount. The Birmingham Steel is a raw material.
Winston sold what he bought for $300,000 to Academy Sports for $1,000,000(The value added here is $1,000,000 - $300,000 = $700,000)
And Academy Sports sold what he bought for $1,000,000 to Winston golf clubs for $1,500,000(The value added here is $1,500,000 - $1,000,000 =$500,000).
Therefore, the total amount added to GDP is $300,000 + $700,000 + $500,000 = $1,500,000
