Question

A farmer grows wheat, which she sells to a miller for $90. The miller turns the wheat into flour, which she sells to a baker for $145. The baker turns the wheat into bread, which she sells to consumers for $155. Consumers eat the bread.Assume that the above transactions account for all economic activity in an economy.GDP in this economy is $______Value added is defined as the value of a producer’s output minus the value of the intermediate goods that the producer buys to make the output.Assuming there are no intermediate goods beyond those previously described, complete the following table by calculating the value added for each of the three producers. Then enter the total value added in the final row.

Answer 1

The correct answer is "$155".

Step-by-step explanation:

Given:

She sells to miller,

= $90

She sells to baker,

= $145

She sells to consumers,

= $155

Now,

The value added by miller will be:

=
`145-90`

=
`55` ($)

The value added by the baker will be:

=
`155-145`

=
`10` ($)

hence,

The GDP in this economy will be:

=
`155` ($)