Because Government Services Are Not Sold in Markets

question 96

Multiple Choice

Because government services are not sold in markets,

• A)they are excluded from measurements of GDP.
• B)the government tries to estimate their market value and uses this to measure the government's contribution to GDP.
• C)they are valued at their cost of production.
• D)taxes are used to value their contribution.

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Definitions:

Deadweight Loss

The loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is not achievable.

Excise Tax

A tax levied on the sale of specific goods and services, such as tobacco, alcohol, and gasoline.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Luxury Yachts

High-end, luxurious boats equipped with sophisticated amenities, designed for comfort and leisure.