Question

In Maricaibo, incandescent lightbulbs are being replaced with fluorescent lightbulbs, which have fewer negative effects and many more significant benefits. However, the energy efficiency of fluorescent lightbulbs has driven down the price of lightbulbs so significantly that incandescent lightbulbs can no longer compete. After six months, everybody has switched to the cheaper and better fluorescent lightbulbs. Assume that Spectacula consumes the same quantity of lightbulbs now as they did six months ago. Please select the choice that best describes the short‑run effects of this industrial change on Spectacula's GDP and its standard of living.
a. There is not enough information to answer the question.
b. GDP increases and standard of living decreases.
c. GDP and standard of living both decrease.
d. GDP decreases and standard of living increases.
e. GDP and standard of living both increase.

Answer 1

Answer:

Answer is c.

Explanation:

1. In the short-run because of cheaper fluorescent lightbulbs at same quantity, GDP decreases. Because monetary value of all finished lightbulbs decreases.
2. As we know that the generally accepted measure of the standard of living is GDP per capita. This is a nation's GDP divided by its population. So in the short-run as a result of GDP decreasing the standard of living also decreases.

Answer 2

Answer:

d. GDP decreases and standard of living increases.

Explanation:

GDP Decreases because majority of the population switches to the cheaper option, which will lower the total market value and the GDP

Standard of Living increases because the population chooses the lightbulb that has more benefits and fewer negative effects on living.