Even Though Households Do Not Actually Purchase Certain Items,the Government

question 38

Multiple Choice

Even though households do not actually purchase certain items,the government estimates and adds to the consumption component what the household would pay for these items in the marketplace.An example of this type of item is

• A) a car that an individual builds from parts of old cars
• B) food that a farm family grows for themselves
• C) a pond that a household member digs by hand
• D) police and fire protection
• E) a barn that a household builds on their own property

---

Definitions:

Unregulated Market

A market where the government does not impose price controls, quotas, or other restrictions on the forces of supply and demand.

Deadweight Loss

The diminished economic effectiveness arising from a failure to achieve or the inability to achieve equilibrium for a product or service.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, intended to protect consumers.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive, typically due to market price.