Are sales and purchases of used goods counted as part of GDP? Why or why not?
What will be an ideal response?
Sales and purchases of used goods are not counted as part of GDP. GDP measures the production of final goods and services produced within a country in a given time period. So GDP for the United States for 2014 includes the goods and services produced within the United States during 2014. The point is that a used good has not been produced within the specified time period. In other words, a used automobile produced in 2012, then in 2014 traded in and resold within the United States was not produced in 2014. Because it was not produced in 2014, it is not a part of the GDP in 2014. (If the automobile was produced within the United States in 2012, the automobile was part of the U.S. GDP in 2012.)
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An isoquant shows
A) the combinations of two inputs that yield the same total product. B) the combinations of two inputs that cost the same total quantity of money. C) the combinations of two goods that yield the same total satisfaction. D) the combination of two goods that cost the same amount of money.
Suppose the firms in a monopolistically competitive market are incurring economic losses. What will happen to move the market to its long-run equilibrium?
A) More close substitutes will appear in the market until economic profits are zero. B) The firms that dropped out of the market will reenter once the level of economic losses is zero. C) Firms will continue to exit the market until economic losses are equal to zero. D) The demand functions of all the firms remaining in the market will become relatively more elastic.
A merger between two firms that produce identical goods would be called
A) a horizontal merger. B) a vertical merger. C) a Lerner merger. D) a duopoly.
Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect
a. an increase in market output and an increase in the price of the product. b. an increase in market output and an decrease in the price of the product. c. a decrease in market output and an increase in the price of the product. d. a decrease in market output and a decrease in the price of the product.