7. 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?
c) How much does GDP increase?
a)
b)
c)
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