You own and run a bakery. Last month, you purchased $760 worth of flour, eggs, butter, chocolate, and frosting. Using these inputs, you made and sold 12 large wedding cakes for an average price of $525. How much did GDP change?
A)GDP rises by $760.
B)GDP rises by $6,300.
C)GDP rises by $7,060.
D)GDP rises by $5,540.

Question

Quizplus · Accepted Answer

GDP rises by the value of the final goods and services produced, which is the total revenue from the cakes sold ($525 x 12 = $6,300). The cost of inputs is not directly added to GDP, as GDP measures the market value of final goods and services produced.

You Own and Run a Bakery