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Why may pollution cost not be fully shown directly in GDP?

Answer and explanation

Correct answer: Because negative externalities may be difficult to measure separately

GDP records the monetary value of market production, but pollution is often a negative externality imposed on people who may not be involved in the transaction. The health, environmental and social costs of pollution may not have an observable market price or may be difficult to separate accurately. Consequently, GDP can increase while environmental welfare falls.

Related tags

EconomicsGdpPollutionNegative ExternalityWelfareGdp And WelfareNational Income And Related AggregatesClass 11 Mcq

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