Suppose a miller sells flour to a baker for $100. The baker then produces bread from the flour and sells it to Coles for $600. Coles in turn then sells it to the public for $850. The increase in GDP as a result of these transactions will be:

Question

Quizplus · Accepted Answer

GDP measures the market value of all final goods and services produced within a country during a specific period. In this scenario, the final good is the bread sold to the public for $850. The transactions between the miller, baker, and Coles are intermediate steps in the production process, and only the final sale to the end consumer counts towards GDP to avoid double counting.

Suppose a Miller Sells Flour to a Baker for $100