Econ Help - Which statements are true.?

Question

The American Paper Company produces $1 million worth of paper and sells it to the College Book Corporation. The College Book Corporation prints 100,000 copies of an economics textbook for which it paid an economics professor $500,000 to write. The College Book Corporation sold the textbooks to college bookstores nationwide for $3 million. The college bookstores received $4 million from students in exchange for the books.

1.2. Which statement(s) concerning the production of paper is true?

I. The $1 million in paper is an input of the production of the textbook.
II. The $1 million in paper is an intermediate good.
III. To include both the $1 million in paper in GDP and the $4 million value of the textbooks would constitute double counting and would result in an inaccurate measure of GDP.

A. I and II only
B. II only
C. I, II, and III
D. II and III only

I would choose C. Am I right or wrong?

Answer 1

C is correct. In calculating GDP, each industry calculate its "value added" not the value of its output.