Suppose that, instead of cooking dinner for an hour you decide to work an extra hour, earning an additional $100. You then buy some food for $80.
1. By how much does measured GDP increase?
2. Does the true GDP increase by more or less?
2007-01-29 12:33:28 · 1 answers · asked by asdfoh a 1 in Education & Reference ➔ Higher Education (University +)
working or eating....whatever you do, is what you do. The extra $100 you made while working just added to your wealth. Not eating was the option you chose to do. Just because you paid $80. for food does not mean that the meal actually costs that amount of money.
So, the next best alternative forgone is the food that you actually ate and not the $80.00 spent on the food. Because not all that money went into that meal.
Isn't economics fun?
2007-01-29 14:52:29 · answer #1 · answered by Dave 6 · 0⤊ 0⤋