Do economists double count when calculating GDP numbers?

Question

Say an industry sells goods for 1000 $ and it costs them 950$ to produce them. Do economist calculate the contribution as 1000$ or as the difference 1000-950=50$?

Can an industry incurring in losses have a negative contribution to the GDP?

Answer 1

Contribution of 1000$ is cumulative contribution of all participants involved in production process, while 50$ is contribution of last member in chain.

If industry have loses then contribution is really negative but it is counted as negative investment (loss of capital).

Answer 2

They don't, because GDP adds up added value created by firms, not turnover (sales, in short).

Now you have to understand this "it costs them..." a bit better.

If a firm A buys goods or services from another firm B to operate, these goods or services are not added value from firm A.

But wages from employees in the firm A are a cost too, but these "add" value to the product.

Anyway, this is something you should find in any decent introductory economics textbook.

Good luck.