If a digital service has a zero market price but increases consumer utility, which limitation of GDP measurement appears?
Answer and explanation
Correct answer: Unpriced benefits are not fully recorded
GDP mainly records market-valued final production. A free digital service may create substantial convenience, information, or enjoyment for users, but its zero price gives it little or no measured market value. Thus the benefit is under-recorded even though welfare rises. Option A is correct; the other choices describe effects that do not follow from a zero-priced service.
Frequently asked questions
What is the correct answer to this question?
Unpriced benefits are not fully recorded
Why is this the correct answer?
GDP mainly records market-valued final production. A free digital service may create substantial convenience, information, or enjoyment for users, but its zero price gives it little or no measured market value. Thus the benefit is under-recorded even though welfare rises. Option A is correct; the other choices describe effects that do not follow from a zero-priced service.
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.
