If a large share of output consists of goods that deteriorate quickly and provide little consumer satisfaction what problem arises despite equal GDP?
Answer and explanation
Correct answer: GDP does not fully reflect differences in utility and durability
GDP applies market prices to measured final output; it does not directly measure the satisfaction, quality, durability, or usefulness consumers obtain from that output. Therefore two economies with equal GDP can provide different welfare when one produces short-lived, low-utility goods. Option A states this limitation. B is false because GDP includes many nondurable goods, while C and D incorrectly equate utility with price.
Frequently asked questions
What is the correct answer to this question?
GDP does not fully reflect differences in utility and durability
Why is this the correct answer?
GDP applies market prices to measured final output; it does not directly measure the satisfaction, quality, durability, or usefulness consumers obtain from that output. Therefore two economies with equal GDP can provide different welfare when one produces short-lived, low-utility goods. Option A states this limitation. B is false because GDP includes many nondurable goods, while C and D incorrectly equate utility with price.
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.
