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question 78

Essay

Answer the following questions:
a.What does GDP measure, and why is it a useful tool for economists, business decision makers, and government policy makers?
b.Explain at least two important things GDP does not measure.


Definitions:

Economic Profits

The surplus left to a business after deducting all costs, including opportunity costs, from its total revenues.

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, which allows for a degree of market power and product differentiation.

Maximizes Profits

The process or strategy by which a firm adjusts its production and pricing to achieve the highest possible profit margins.

Monopolistic Competition

A sector characterized by a vast number of entities offering goods that resemble each other but are not exact duplicates, allowing for limited market authority.

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