Question

Suppose we have the following information for a hypothetical economy: Farmer Freddy sells $50 worth of grain to Mindy Miller. Mindy Miller turns the grain into flour, and sells it to Barney Baker for $80. Barney Baker turns the flour into cakes and sells them to customers for $200, who eat them. What is the GDP in this scenario

Answer 1

Answer: $200

Explanation:

The Gross Domestic Product is the final market value of goods and services produced in a country in a given period ( usually a year) and is a measure of economic performance.

Intermediate goods are not included in the calculation as it will lead to double counting since all the intermediate transactions will be reflected in the final price.

The GDP in this scenario is therefore $200.