In Order to Include Many Different Products in an Aggregate

question 52

Multiple Choice

In order to include many different products in an aggregate measure, how is GDP computed?

• A) using values of goods based on consumers' tastes
• B) using primarily costs of production
• C) using primarily market prices
• D) using weights that are computed by how much of a particular good is produced relative to total output

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing the benefit to producers.

Binding Price Ceiling

A government-imposed price limit on how high a price can be charged for a product or service, set below the market equilibrium, causing shortages.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual market price they receive, essentially the profit producers earn from selling a good.

Consumer Surplus

The variance in the sum total consumers are enthusiastic and financially able to spend on a good or service versus what they end up paying.