Carl's Computer Center sells computers to business firms. Businesses then use the computers to produce other goods and services. Over the past year,
sales representatives were paid $3.5 million, $0.5 million went for rent on the building, $0.5 million went for taxes, $0.5 million was profit for Carl, and $10 million was paid for computers at the wholesale level. What was the firm's total contribution to GDP?
$5 million. Note that the $10 million paid for computers is not part of value added. Note also that the fact that the firm produces an intermediate good doesn't mean that it doesn't contribute to GDP.
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The commodity substitution bias is that
A) consumers substitute high-quality goods for low-quality goods. B) government spending is a good substitute for investment expenditures. C) national saving and foreign borrowing are interchangeable. D) consumers decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative price falls.
A private good:
A. is a good for which consumption involves perfect rivalry. B. is nonexcludable. C. is often provided by the government. D. is a good for which consumption involves perfect rivalry and is nonexcludable.
Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,
A) the supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house. B) the demand curve for new houses would shift rightward, since now every family would want to buy a house. C) the demand curve for new houses would shift leftward. D) the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price. E) c and d
An example of a good that is nonexcludable is:
A. an art exhibition with an admission fee. B. a piece of Velcro. C. space exploration. D. a bottle of Tang.