In the above figure, when the price of pretzels is 3.00 per ...

[aabwk4]

In the above figure, when the price of pretzels is 3.00 per pound, the total producer surplus from all the pretzels will be
 
  A) zero.
  B) greater than at any other price.
  C) less than at any other price.
  D) the sum of the difference between 3.00 and the marginal cost of all the pounds produced.

Question 2

Why does real GDP have limitations in determining economic welfare?
 
  What will be an ideal response?

[dpost18]

Answer to Question 1

D

Answer to Question 2

First economic welfare is a broad concept of economic well-being that entails all goods and services not just those measured by GDP. These include production in the home and within the underground economy. Secondly, items such as leisure time are all aspects that are highly desirable and count for economic welfare yet are not measured by GDP. Lastly, environmental quality is highly desired yet real GDP growth could actually reduce the quality of the environment. So for all these reasons, economic growth is not totally determined by real GDP.