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If a production process harms workers' health but increases demand for medical services, what may GDP show?

Answer and explanation

Correct answer: Growth from both production and medical spending while net welfare may fall

GDP adds the market value of production and paid medical services, but it does not subtract every non-market cost such as pain, reduced health, lost leisure, or diminished quality of life. Consequently, harmful production can raise output and the resulting medical expenditure can also be recorded as activity, even while workers’ net welfare declines. Option C is correct. This illustrates why gross market activity is not identical to social welfare.

Related tags

Worker HealthMedical SpendingNet WelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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