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A family earlier cooked food at home but now buys the same food from a restaurant. What may happen to GDP?

Answer and explanation

Correct answer: GDP will rise

GDP records the market value of final goods and services sold during production. Home cooking is generally unpaid household production and has no recorded market price, whereas a restaurant sale creates a market transaction with a measurable value. Thus the shift can increase measured GDP, so option B is correct, even though the family may be receiving a similar meal and total welfare need not rise by the same amount.

Related tags

Market ActivityHousehold ProductionGdpWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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