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Why may the full damage of pollution not be shown in GDP?

Answer and explanation

Correct answer: Because many external costs do not appear in market value

GDP records the market value of measured final production, not every social cost created during production or consumption. Pollution is a negative externality: its health, environmental, and cleanup costs may not be fully included in market prices. Consequently, GDP can remain high while welfare falls, so option A is correct.

Related tags

EconomicsGdp And WelfarePollutionExternalityEnvironmentNational Income And Related AggregatesClass 11 Mcq

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