The statement "Gross domestic product (GDP)values all output equally" means that:
A)household production is treated the same as production by firms.
B)depreciation of manufactured capital is treated the same as depletion of natural resources.
C)the purchase of pollution control equipment is valued the same as pollution itself.
D)leisure time is valued the same as time spent working a job.
E)the market price of output is the measure of that output's value.

Question

Quizplus · Accepted Answer

GDP values all output equally in terms of their market prices, meaning that the value of output is measured based on the price that it is sold for in the market. Therefore, the purchase of pollution control equipment or depreciation of manufactured capital would be accounted for in the market price of the final product, and leisure time or household production would not be included in GDP as they do not have a market value.

The Statement "Gross Domestic Product (GDP)values All Output Equally" Means