One Bag of Flour Is Sold for $1

question 50

Multiple Choice

One bag of flour is sold for $1.00 to a bakery,which uses the flour to bake bread that is sold for $3.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

• A) GDP increases by $2.00.
• B) GDP increases by $3.00.
• C) GDP increases by $5.00.
• D) GDP increases by $6.00.

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Definitions:

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand, leading to market stability where there is no shortage or surplus.

Temporary Surplus

A situation where the supply of a product exceeds its demand for a short period, often leading to price reductions.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a particular price.

Maximum Price

The highest possible price that can be charged for a good or service, often regulated by law.