Apple Releases a New IPhone

question 327

Multiple Choice

Apple releases a new iPhone. Which of the following components of U.S. GDP will not be affected, given that the iPhone is manufactured in China?

• A)​It will increase U.S. net exports, since a U.S. corporation makes the iPhone.
• B)​It will increase consumptions expenditures when U.S. consumers purchase new iPhones.
• C)​It will increase investment, since Apple places some of the iPhones in to its inventory.
• D)​It will increase government expenditures, since some iPhones are purchased by the federal government.

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Definitions:

Differentiated Products

Goods or services that are distinguished from each other by specific features, branding, or quality, making them non-perfect substitutes in the eyes of consumers.

Competitive Market

A market structure characterized by a large number of buyers and sellers, wherein no single entity has significant power to dictate market conditions.

Free Entry

is a market condition where any business can enter the industry without facing significant barriers, promoting competition.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity demanded.