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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![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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0b54a11b-2ac8-42ea-abe3-0989946e1f16%2F9f688da0-7d7c-427a-81ba-f68e45e1216a%2Fik6s8u_processed.jpeg&w=3840&q=75)
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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