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?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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?
Transcribed Image Text: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?
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