Each year, Johan typically does all his own landscaping and yard work. He spends $200 per year on mulch for his flower beds, $225 per year on flowers and plants, $50 on fertilizer for his lawn, and $245 on gasoline and lawn mower maintenance. The lawn and garden store where he obtains his mulch and fertilizer charges other customers $500 for the service of spreading that much mulch in flower beds and $50 for the service of distributing fertilizer over a yard the size of Johan’s. Paying a professional yard care service to mow his lawn would require an expenditure of $1,200 per year, but in that case Johan would not have to buy gasoline or maintain his own lawn mower.

a. In a normal year, how much does Johan’s landscaping and yard work contribute to GDP?

b. Suppose that Johan has developed allergy problems this year and will have to reduce the amount of his yard work. He can wear a mask while running his lawn mower, so he will keep mowing his yard, but he will pay the lawn and garden center to spread mulch and distribute fertilizer. How much will all the work on Johan’s yard contribute to GDP this year?

c. As a follow-up to part (b), at the end of the year, Johan realizes that his allergies are growing worse and that he will have to arrange for all his landscaping and yard work to be done by someone else next year. How much will he contribute to GDP next year?

 

Q