What are the problems encountered by using revenues as a proxy for output?
A) Revenues are distorted by changes in relative prices of service outputs.
B) Many services produce both tangible and intangible outputs.
C) Services produce only tangible outputs.
D) There are no problems encountered.
E) A and B only

Question

Quizplus · Accepted Answer

Revenues can be distorted by changes in relative prices of service outputs, which can lead to inaccuracies when using them as a proxy for output. Additionally, many services produce both tangible and intangible outputs, making it difficult to accurately measure their overall output based on revenues alone. Thus, both option A and B are correct, making option E the best choice. Option C is incorrect as it is a false statement, and option D is incorrect as there are problems encountered when using revenues as a proxy for output.

What Are the Problems Encountered by Using Revenues as a Proxy