Question

Pollution caused by candles isn't taken into account.Quality improvements as a source of well-being are ignored.GDP doesn't capture the soothing effect of candlelight.The marginal cost of light is zero, and by convention zero-priced goods and services areexcluded from GDP.Professor Nordhaus' light example in the Economist article "The trouble with GDP"highlights a major shortcoming of GDP as a measure of welfare. Which of the answersbelow best captures the essence of his argument?
A. Pollution caused by candles ian't taken into account .
B. Quality improvements as a source of well-being are ignored.
C. GDP doesn't capture the aoothing effect of candlelight . D. The marginal cost of light is zero, and by convention zero-priced goods and services are excluded from GDP

Answer 1

Answer:

D. The marginal cost of light is zero, and by convention zero-priced goods and services are excluded from GDP

Explanation:

Only things that have a monetary cost are included in GDP. Things that do not cost "anything" in monetary terms are not included, and this is a major shortcoming of GDP.

From an ecological economics standpoint, things like sunlight, air, and water are often not valued and included in GDP. This is the same case as in the question, because the marginal cost of light is zero, then, it is not included in GDP.