A farmer buys seed for 20 cents that is used to grow wheat. The farmer sells the wheat to the miller for 35 cents, and the miller makes flour, which is then sold to the baker for 55 cents. The baker makes bread and sells it to the grocer for 80 cents, and the grocer sells the bread to a family for 90 cents. What is the value added of the baker and what is the sum of the value added at each stage of production?
A. 25 cents; $2.90
B. 80 cents; $1
C. 25 cents; 90 cents
D. 80 cents; $2.90
Answer: C
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Gains from trade
A) result in being able to consume beyond the trading individuals' production possibilities frontiers. B) occur when one party to the trade has an absolute advantage in both goods. C) occur when people do not specialize. D) occur when opportunity costs are equal. E) always benefit one party but not the other party of any trade.
Suppose an economy has output of 2100, government spending of 40, consumption of 1600, and absorption of 1940. Calculate the equilibrium values of investment and net exports
What will be an ideal response?
Refer to Figure 10.1. If the monopolist is not regulated, the price will be set at ________
A) P1 B) P2 C) P3 D) P4 E) none of the above
Which of the following would increase the incentive of consumers to economize and of producers to provide medical services at economical prices?
a. substitution of catastrophic health insurance plans for low deductible, low co-payment plans b. more reliance on medical savings accounts rather than insurance c. equalization of tax treatment between out-of-pocket medical expenses and employer-provided health insurance d. all of the above