How would each of the following events likely change measured GDP?
a. The sale and use of marijuana is legalized.
b. There is an increase in sales of counterfeit video games.
c. A foreign-owned furniture manufacturer opens a production facility in South Carolina.
d. More people choose to forgo their lawn maintenance services to take care of their own yards.
a. If marijuana is legalized, marijuana sales will now be recorded in GDP, so GDP will increase.
b. An increase in sales of counterfeit products will not likely change GDP since these products are illegal and the sales are most likely not being reported.
c. If a foreign-owned manufacturer opens in the United States, U.S. GDP will increase.
d. If people choose to no longer pay for lawn maintenance services and choose instead to perform the services themselves, GDP will decrease.
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When a regulatory agency uses rate of return regulation, the
A) agency is able to eliminate the deadweight loss. B) firm's managers have an incentive to inflate the firm's costs. C) regulated firm's profit must be maximized for the market to be efficient. D) regulated firm must receive a government subsidy. E) the agency is using a form of marginal cost pricing.
A real cost of tariffs and quotas that is difficult to measure is that they
A) encourage rent seeking. B) shift income from consumers to producers. C) limit the quantity of imports. D) reduce wages.