Which of the Following Will Increase This Year's GDP

question 12

Multiple Choice

Which of the following will increase this year's GDP?

• A)the sale of a used economics textbook to the college bookstore
• B)family lawn services provided by a 16-year-old son or daughter
• C)$60,000 of income earned by an American college professor teaching in England
• D)a $100 sales commission to a broker for a purchase of 100 shares of stock
• E)$10 billion of damage caused by a hurricane that hit the coast of Florida

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Definitions:

AVC

stands for Average Variable Cost, which is the total variable cost divided by the quantity of output produced.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a good or service.

AVC

Average Variable Cost, the variable cost per unit of output.

Law Of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if all other variables remain at a constant.