A country expands free access to public parks without additional market payment. What is the possible effect on welfare and GDP?
Answer and explanation
Correct answer: Welfare may rise while GDP changes very little
Public parks provide a non-market or publicly provided amenity. Greater access can improve recreation, health, and quality of life, so welfare may rise. However, if no additional market payment or recorded production occurs, the full benefit is not added to GDP; measured GDP may change little. Thus option B is correct. Equal movement is not necessary, and the other choices contradict the likely welfare effect.
Frequently asked questions
What is the correct answer to this question?
Welfare may rise while GDP changes very little
Why is this the correct answer?
Public parks provide a non-market or publicly provided amenity. Greater access can improve recreation, health, and quality of life, so welfare may rise. However, if no additional market payment or recorded production occurs, the full benefit is not added to GDP; measured GDP may change little. Thus option B is correct. Equal movement is not necessary, and the other choices contradict the likely welfare effect.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
