The Arcadia Entertainment Co

question 208

Multiple Choice

The Arcadia Entertainment Co. produced 20,000 DVDs of the movie Thor in 2011. Only 4,000 copies remained unsold at the end of 2011. As a result:

• A) only 16,000 DVDs should be included in GDP in 2011 as consumption expenditure.
• B) all 20,000 DVDs will be included in GDP in 2011, 16,000 as consumption expenditure and 4,000 as investment expenditure.
• C) only 16,000 DVDs are included in GDP of 2011; the remaining 4,000 are counted in GDP of 2012.
• D) all 20,000 DVDs are initially counted in 2011 GDP as consumption expenditure, but they will be subtracted and added to 2012 GDP as the merchandise gets sold.

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Definitions:

Total Revenue

The total receipts from sales of goods or services provided by a company.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, all of whom have full information and the products are homogeneous, leading to no single buyer or seller being able to influence the market price.

Quantity Of Output

The total amount of goods or services produced by a company, sector, or economy during a specified period.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.