Answer to Question #208241 in Microeconomics for Pinky Aggarwal

Question

1. You sometimes hear, “You can’t add apples and oranges.” Show that we can and do add apples and oranges in the national accounts. Explain how. [3 marks]

Answer 1

Apple and oranges can not be add it is idiom that is used to describe the difference between the things that are known thought of economist that can not be compare. In economics it is very difficult to measure the national income on ground reality due to the lack of appropriate unit of measurement. In economics to measure national income we use three methods, Product Method or value output method, Income Method and Expenditure Method. which are insufficient. The GDP or national income is intangible 

In real GDP consists not only of apples and oranges, but also computers, electricity, transportation, education, and thousands of other goods and services that can't be added directly in economics.