Your barber charges 10 for a haircut In turn the barber pays

Your barber charges $10 for a haircut. In turn, the barber pays his assistant $2 per haircut in return for sharpening the scissors, sweeping the floor, etc. For each haircut given, what is the total contribution of the barber and his assistant, taken together, to GDP?

Solution

The total contribution of barber and his assistant, taken together, to GDP is $10. Because GDP is the market value of all final goods and services. Here, haircut is a final service. Therefore, the total contribution to GDP is $10.