1. Consider this simplified sequence: A farmer starts with a unit of wheat and sells it to a miller for 20 cents. The miller grinds it into flour and sells it to a baker for 50 cents. The baker converts all the flour into a loaf of bread and sells it to a grocer for $2.00. The grocer then sells that bread to a customer for $3.35. a) What is the total value added by the grocer? b) What is the total value added by all these stages of production? I c) How much does GDP increase?

1. Consider this simplified sequence: A farmer starts with a unit of wheat and sells it to a miller for 20 cents. The miller grinds it into flour and sells it to a baker for 50 cents. The baker converts all the flour into a loaf of bread and sells it to a grocer for $2.00. The grocer then sells that bread to a customer for $3.35. a) What is the total value added by the grocer? b) What is the total value added by all these stages of production? I c) How much does GDP increase?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 2CQQ

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