A Farmer Grows Wheat and Sells It to a Bakery

question 150

Multiple Choice

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.

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Definitions:

Shares Of Stock

Units of ownership interest in a corporation that give the owner a share in the company's profits and voting rights.

Market Rate

The prevailing interest rate available in the marketplace for similar financial instruments or loans.

Dividend Growth

The speed of growth in dividend disbursements to stockholders by a firm over successive periods.

Selling

The act of offering goods or services in exchange for money.