Read the following statements carefully :
Statement I : Positive externalities refer to the benefits a firm/an individual provides to another for which they are paid.
Statement II : In case of positive externalities, Gross Domestic Product (GDP) of an economy might lead to an overestimation of the actual welfare.
In the light of the given statements, choose the correct option from the following :
Read the following statements carefully :
Statement I : Positive externalities refer to the benefits a firm/an individual provides to another for which they are paid.
Statement II : In case of positive externalities, Gross Domestic Product (GDP) of an economy might lead to an overestimation of the actual welfare.
In the light of the given statements, choose the correct option from the following :
Show Hint
- Statement I is true and Statement II is false.
- Statement I is false and Statement II is true.
- Both Statements I and II are true.
- Both Statements I and II are false.
The Correct Option is D
Solution and Explanation
An externality is a benefit or harm caused by a firm or person to others, with no payment. Positive externalities are benefits, such as a neighbouring garden. Negative ones are harms, such as pollution.
Step 2: Check Statement I:
The statement says these benefits are paid for. By definition, positive externalities are benefits for which no payment is made.
So Statement I is false.
Step 3: Check Statement II:
GDP counts only what is bought and sold. Benefits given free are not counted, so GDP understates the actual welfare.
An overestimation of welfare happens with negative externalities like pollution. So Statement II is false.
Step 4: Choose the option:
Both are false. (A), (B) and (C) say at least one is true, so they are wrong.
Final Answer:
Both Statements I and II are false. This is option (D).
Top CBSE CLASS XII Economics Questions
___________ farming is a system that is helpful in restoring, maintaining and enhancing the ecological balance.
(Choose the correct alternative to fill in the blank):The present day rapid industrial growth in China can be traced back to the economic reforms introduced in 1978, where ________ .
(Choose the correct alternative to fill in the blank):
(i) Initially reforms were initiated in agriculture, foreign trade and investment sectors.
(ii) The policy of dual pricing was adopted.
(iii) The Government revoked the policy of Special Economic Zones.Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): In the recent past, Indian economy has been facing the problem of jobless growth.
Reason (R): Jobless growth refers to a situation where an economy is able to produce more goods and services without generating additional employment.Read the following statements carefully:
Statement 1: India, Pakistan, and China have similar physical endowments but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.Read the following statements carefully:
Statement 1: India, Pakistan and China have similar physical endowments, but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.
Top CBSE CLASS XII National Income Accounting Questions
- Identify which of the following statements is incorrect with reference to an economy.
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