CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

A miller buys a pound of wheat from a farmer for 30 cents, grinds it into flour, and sells it to a baker for 60 cents. The baker combines the flour with other ingredients and makes a loaf of bread. The baker then sells it to the grocery store for 90 cents. The grocery store then adds 10 cents and sells it to a customer. How much should be included in the GDP in this example?
Correct Answer: $1

The one-dollar price reflects the value added at each stage of production. It should be added to GDP.

User Contributed Comments 1

User Comment
forry9er You don't need to use the value added approach - It's generally inefficient and will result in the EXACT same number, as the final sale price. In this case 90 cents + 10 cents = $1.00
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