A public park provides free recreation and a clean environment. Why is its full benefit not shown in GDP?
Answer and explanation
Correct answer: Many of its benefits have no market price
The governing concept is that GDP measures recorded market production, whereas many public or environmental benefits are non-market. A park may require land, workers and maintenance that contribute to measured activity, but free recreation, cleaner air and social benefits do not have a complete observable market price. Therefore option A is correct; the park is not necessarily imported, useless or resource-free.
Frequently asked questions
What is the correct answer to this question?
Many of its benefits have no market price
Why is this the correct answer?
The governing concept is that GDP measures recorded market production, whereas many public or environmental benefits are non-market. A park may require land, workers and maintenance that contribute to measured activity, but free recreation, cleaner air and social benefits do not have a complete observable market price. Therefore option A is correct; the park is not necessarily imported, useless or resource-free.
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.
