How does the presence of negative externalities affect the calculation of GDP?

What will be an ideal response?


Negative externalities arise when one person's action makes somebody else worse off. Externalities are also omitted from the calculation of GDP. Sometimes negative externalities even get counted as positive contributors to economic output. For example, property crimes, like theft, lead people to purchase locks and other security devices. In some cases, property owners hire guards to safeguard their possessions. All of this preventive activity counts as a positive contributor to GDP.

Economics

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After a price ceiling of $8 is placed on the market in the graph shown, which area represents producer surplus?



A. C + D + E
B. C + D + F + G
C. E
D. A + C + E

Economics

Other things held constant, investment in physical capital will increase: a. labor productivity. b. national income

c. wages. d. all of the above

Economics

The “cradle to cradle” approach to materials and waste management

a. involves a linear flow of materials and wastes b. involves a cyclical flow of materials and wastes c. acknowledges design for recycling in the waste management process d. none of the above e. (b) and (c) only

Economics

The copyright gives its owner

A. the exclusive right to sell a work of intellectual property. B. the ability to protect its "brand" like Coca-Cola. C. (usually students) the right to make photocopies for friends. D. the exclusive right to sell an invention.

Economics