If industrial output rises but noise pollution increases greatly which cost is not fully reflected in GDP?
Answer and explanation
Correct answer: Social cost to health and peace of mind
The governing concept is a negative externality: production can impose costs on nearby people without a complete market payment to them. Noise may cause stress, poor sleep, reduced concentration, and health damage, so its social cost is not fully recorded in the value of industrial output. Option D is correct. Wages, raw materials, and machinery are ordinary production costs more directly included in market transactions.
Frequently asked questions
What is the correct answer to this question?
Social cost to health and peace of mind
Why is this the correct answer?
The governing concept is a negative externality: production can impose costs on nearby people without a complete market payment to them. Noise may cause stress, poor sleep, reduced concentration, and health damage, so its social cost is not fully recorded in the value of industrial output. Option D is correct. Wages, raw materials, and machinery are ordinary production costs more directly included in market transactions.
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.
