Give an Example of How Real GDP Could Be Increased

question 38

Essay

Give an example of how real GDP could be increased even though no more output is produced.

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Definitions:

Price Discrimination

The strategy of selling the same product at different prices to different groups of consumers, based on willingness to pay.

Discount Retailers

Stores that offer products at lower prices by accepting lower margins in return for a high sales volume.

Arbitrage

The practice of taking advantage of price differences between markets to make a profit.

Vertical Contracts

Agreements between firms at different levels in the supply chain (e.g., manufacturer and retailer) to govern the terms of sale or purchase.