MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Chapter 2, Problem 2PA
To determine

Contribution to GDP.

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A farmer grows a bushel of wheat and sells it to a miller for $1.00. The miller turns the wheat into flour and then sells the flour to a baker for $3.00. The baker uses the flour to make bread and sells the bread to an engineer for $6.00. The engineer eats the bread. What is the value added by each person? What is GDP?
Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $450. Camille uses the cloth to make prom dresses that she sells to Donita for $900. Donita sells the dresses for $2100 to kids attending the prom. The total contribution to GDP of this series of transactions is?
A farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into flour and then sells it to a Baker for $25.00. The Baker uses the flour to bake bread and sells the bread to a Musician for $40.00. The Musician eats the bread. The Musician, also grows pumpkins in his backyard garden to feed his family.   a) what is the GDP?   b) what is the value added by each person ?   c) should pumpkins be included in the GDP?
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