A Significant Problem with Developing Nations Relative to Their Production

question 88

Multiple Choice

A significant problem with developing nations relative to their production of capital goods and consumption goods is

• A)capital and consumption goods do not play a vital role in the role of determining real GDP.
• B)that producing fewer capital goods invests in the future and allows for future decreases in consumption goods,but sacrifices current consumption goods which may prove beneficial to citizens in the short run.
• C)that producing more capital goods invests in the future and allows for future increases in consumption goods,but sacrifices current consumption goods which may prove detrimental to citizens in the short run.
• D)it is not a real problem since developing nations are not our trading partners;only the united States plays a vital role in Canadian trade policy.

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Definitions:

Total Surplus

The total net gains for society represented by the combined amount of consumer surplus and producer surplus in a market.

Producer Surplus

This is an economic measure of the difference between the amount producers are willing to supply a good for and the amount they actually receive.

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a product and the actual market price they pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive due to market price.