When Computing U

question 147

Multiple Choice

When computing U.S. GDP, a good or service is weighted

• A)according to corporate concerns.
• B)according to the quantity of the good or service available.
• C)according to the concerns of pressure groups.
• D)according to government directive.
• E)according to its value.

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Definitions:

External Costs

Costs that are not borne by the producer or consumer of a good or service, but by third parties or society as a whole, such as pollution.

Market Outcome

The end result of market interactions, determined by supply and demand forces, affecting prices and quantities.

Efficient Price

A market price that fully reflects all available information and maximizes the total benefits to society.

External Benefits

Positive effects experienced by third parties or the public due to an economic transaction they were not directly involved in.