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If a farmer consumes his own product that he has grown, is it economic or non-economic?

Question:

If a farmer consumes his own product that he has grown, is it economic or non-economic?

Gross Domestic Product:

Gross domestic product (GDP) is the most frequently used measures of the size of an economy. This measures calculates the total value of goods and services produced for the market in an economy.

Answer and Explanation:

If a farmer consumer his own product that he has grown, then the output is not included in the measure of output, i.e., gross domestic product (GDP). This is because GDP measures only the value of goods and services produced for the market in an economy. Therefore, goods that are consumed by the farmer, and hence are not supplied to the market, are not included in the calculation of GDP. Instead, such goods are categorized as home production. According to some measures, home production could be as large as 8% of the U.S. economy.


Learn more about this topic:

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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
58K

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