A farmer grows wheat and sells it to a bakery for $5.The bakery bakes the wheat into bread,which it sells to a distributor for $20.The distributor sells the bread to a supermarket for $30,which sells the bread to customers for $50.Which of the following is true?
A)The value added by the distributor is $30.
B)The supermarket contributed more,in value added,than the bakery.
C)As a result of this activity,GDP rises by $50 minus the value added at each stage of production.
D)Counting the value added at each stage instead of the final selling price creates a serious problem of double counting.
E)The value added by the farmer is $20 because the wheat,which is worth $5,is necessary for each of the three remaining stages of production.

Question

Quizplus · Accepted Answer

The supermarket's value added is $20 ($50 - $30), which is more than the bakery's value added of $15 ($20 - $5).

A Farmer Grows Wheat and Sells It to a Bakery