One Problem with Using Market Values to Measure GDP Is

question 1

Multiple Choice

One problem with using market values to measure GDP is that

• A)you cannot compare completely heterogeneous goods by using their dollar values.
• B)some useful goods and services are not sold in markets.
• C)prices for some goods change every year.
• D)market values of export goods are usually priced in foreign currencies.

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, which can influence production and pricing decisions.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, which decreases as production increases.

Total Cost

The sum of fixed costs and variable costs incurred by a business in the production of a good or service.

Average Fixed Cost

The fixed costs of production (such as rent, salaries, and equipment) divided by the quantity of output produced.