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If digital services are free to users and financed by advertising, what difference may exist between consumer welfare and GDP?

Answer and explanation

Correct answer: Consumer benefit may exceed the recorded market value

Consumer welfare depends on the utility or benefit received, not only on the price paid. A digital service priced at zero can provide substantial convenience, information, or entertainment, creating consumer surplus. Advertising revenue may record some market activity, but GDP may not fully capture users’ unpaid benefit. Thus option B is correct; A and D confuse zero price with zero value, while C is an unjustified universal claim.

Related tags

Digital-ServicesConsumer-SurplusAdvertisingGdp-MeasurementGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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