Homework SourseA farmer sells wheat to a flour mill for 2 The flour mill se
A farmer sells wheat to a flour mill for $2. The flour mill sells the flour to a baker for $3 and the baker sells the bread to customer for $5. What is the contribution to GDP?
Solution
GDP = sum of all value added
GDP = 2 + 1 + 2 + 0 = $ 5
| Cost | Sold | Value Added | |
|---|---|---|---|
| Farmer | 0 | 2 | 2 |
| Miller | 2 | 3 | 3 - 2 = 1 |
| Baker | 3 | 5 | 5 - 3 = 2 |
| Customer | 5 | 0 | 0 |
