3140ps1_Fall2011 - Economics 3140 Fall 2011 Problem Set 1 Due in class Wednesday Question 1 a A farmer grows a bushel of wheat and sells it to a

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Economics 3140 Fall 2011 Problem Set 1 Due in class Wednesday September 21, 2011 Question 1: a. A farmer grows a bushel of wheat and sells it to a miller for $2.00. The miller turns the wheat into flour and then sells the wheat to a baker for $3.00. The baker uses the flour to make bread and sells the bread to an engineer for $7.00. The engineer eats the bread. What is the value added by each person? What is GDP? b. Suppose a woman marries her full time gardener. After they are married, her husband continues to do the gardening, and she continues to support him as before (but as a husband rather than as an employee). How does the marriage affect GDP? How should it affect GDP? c. In measuring the well being of the economy, we usually use an output measure such as real GDP. Is bigger necessarily better? Discuss the factors that make real GDP a good as well as a bad measure of economic well being. Question 2:
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This note was uploaded on 11/30/2011 for the course ECON 3140 taught by Professor Mbiekop during the Fall '07 term at Cornell University (Engineering School).

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3140ps1_Fall2011 - Economics 3140 Fall 2011 Problem Set 1 Due in class Wednesday Question 1 a A farmer grows a bushel of wheat and sells it to a

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