Why may the value of vegetables grown and consumed by a family in its home garden be omitted from GDP?
Answer and explanation
Correct answer: No market transaction was recorded
The governing concept is the measurement boundary of GDP: it primarily records production valued through market transactions or reliable imputed prices. Home-grown vegetables consumed by the same family may create real value, but no sale or recorded market payment occurs, so the output can be missed or estimated imperfectly. Option B is correct; the vegetables are food, not imports or capital goods.
Frequently asked questions
What is the correct answer to this question?
No market transaction was recorded
Why is this the correct answer?
The governing concept is the measurement boundary of GDP: it primarily records production valued through market transactions or reliable imputed prices. Home-grown vegetables consumed by the same family may create real value, but no sale or recorded market payment occurs, so the output can be missed or estimated imperfectly. Option B is correct; the vegetables are food, not imports or capital goods.
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.
