ECO 2013 Lecture Notes - Lecture 9: Gdp Deflator, Opportunity Cost
Document Summary
Producers are willing to offer greater quantities for sale at higher prices because they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses. If a used-car dealer purchases a used car for ,000, restores it, and resells it for ,500, the dealer contributes value added equal to , and consequently is added to gdp. How much would be added to this year"s gdp if you sold your four-year-old automobile for ,000 and purchased a two-year-old model from an acquaintance for ,000. nothing. Goods produced in one period that are sold in the following period fail to get counted in any period. Accurate measurement of gdp is important to business decision-makers because this information will help them better determine the course of the economy and the direction of demand for their products.
