Author Question: Which of the following is counted in GDP? A) the value of do-it-yourself work B) the value of ... (Read 62 times)

drink · **on:** Jun 29, 2018

Which of the following is counted in GDP?

A) the value of do-it-yourself work
B) the value of leisure
C) the value of goods and services produced in the underground economy
D) the cost of a speed boat purchased by drug smugglers

Question 2

Define marginal cost and calculate Brazil's marginal cost of producing a ton of food when the quantity produced is 2.5 tons per day.

What will be an ideal response?

zoeyesther · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

D

Answer to Question 2

The marginal cost of a good is the opportunity cost of producing one more unit of the good. When the quantity of food produced is 2.5 tons, the marginal cost of a ton of food is the opportunity cost of increasing the production of food from 2 tons per day to 3 tons per day. The production of ethanol falls from 54 barrels per day to 40 barrels per day, a decrease of 14 barrels per day. The opportunity cost of increasing food production is the decrease in ethanol product, so the opportunity cost of producing a ton of food when 2.5 tons of food per day are produced is 14 barrels of ethanol per day.