Worth of instruments and other parts

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Airbus (a European consortium) operates a plant in Alabama. To make a commercial aircraft, the plant purchases engines from a factory in Germany and instruments and assorted parts from aerospace companies in California. The Alabama plant manufactures the frame and assembles the aircraft. A typical Airbus plane which costs $40 mill contains $10 mill worth of engines and $12 mill worth of instruments and other parts. The value added by the Alabama plant makes up the remaining $18 mill.

Suppose that a total of 10 planes are made in the Alabama plant. Five of them are sold to domestic U.S. carriers and the other 5 are sold to carriers in E. Asia. How would U.S. GDP and its components be affected by the production of these 10 Airbus planes in Alabama?

Reference no: EM131857790

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