How Is Flour Treated in GDP Terms

question 48

Multiple Choice

How is flour treated in GDP terms?

• A) It is always counted as an intermediate good.
• B) It is counted as a final good if it is used by a company to make bread.
• C) It is counted as a final good if it is used by a consumer who bakes bread for his own consumption.
• D) It is always counted as a final good.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, including both fixed and variable costs.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and loan payments.

Marginal Cost

The monetary outlay for producing an additional unit of a good or service.

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or sales, such as rent and salaries.