Answer to Question #151256 in Macroeconomics for Ahmad Zameer

Question

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 GD

Answer 1

Value added by;

• Farmer will be $1- $0 = $1
• Miller will be $3-$1= $2
• Baker will be $6-$3=$3

GDP is the final value added of production by all persons. Therefore, GDP will be $1+$2+$3=$6