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AFC: The abbreviation for average fixed cost, which is fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. Average fixed cost is one of three related cost averages. The other two are average variable cost and avarage total cost. Average fixed cost decreases with larger quantities of output. Because fixed cost is FIXED and does not change with the quantity of output, a given cost is spread more thinly per unit as quantity increases. A thousand dollars of fixed cost averages out to $10 per unit if only 100 units are produced. But if 10,000 units are produced, then the average shrinks to a mere 10 cents per unit.

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GROSS NATIONAL PRODUCT:

The total market value of all final goods and services produced by the citizens of an economy during a given period of time, usually one year. Gross national product, often abbreviated simply as GNP, was once the official measure of how much output the U.S. economy produced. In the early 1990s, however, it was replaced by gross domestic product (GDP).
Gross national product is very similar to gross domestic product. However, they differ in one important regard. GNP measures the value of output produced using resources owned by the citizens of a country, regardless where the production occurs. GDP, in contrast, measures all of the output produced within the political boarders of a country, regardless of the citizenship of the resources doing the producing. The prime difference between GNP and GDP is net foreign factor income.

Gross national production is ALMOST equal to gross domestic product. They usually differ by less than 1 percent. For anyone inclined to use "approximations" or "abouts," then either domestic or national can be comfortably used in the statement:

"Gross domestic/national production is approximately _____ trillion dollars."
The reason for this approximate equality is that most production is performed by citizens within the boundaries of the domestic country, and thus are part of both GDP and GNP.

However, the differences are also worth noting. Some production from resources owned by domestic citizens takes place in foreign countries, and some production from resources owned by foreign citizens takes place in the domestic economy.

Consider a few examples.

  • Included in Both: Automobile production using the labor of a U.S. citizen who is employed by an American-owned factory in the United States is included in both U.S. GNP and U.S. GDP. Production takes place within the political boundaries of the United States and is performed using resources owned by U.S. citizens.

  • Only in GDP: Apple pie production using the labor of a Canadian citizen who is employed by a Canadian-owned factory in the United States is included in U.S. GDP, but not U.S. GNP. Production takes place within the political boundaries of the United States, but it is not performed using resources owned by U.S. citizens. This production, however, is included in Canadian GNP (but not Canadian GDP).

  • Only in GNP: Hockey-stick production using the labor of a U.S. citizen who is employed by a American-owned factory in Canada is included in U.S. GNP, but not U.S. GDP. Production is performed using resources owned by U.S. citizens, but does not take place within the political boundaries of the United States. This production, however, is included in Canadian GDP (but not Canadian GNP).
With the exception of who does the production and where the production occurs, virtually anything said about GDP also applies to GNP. This measure is tabulated and reported by the Bureau of Economic Analysis of the U. S. Department of Commerce, and although it is less well publicized, it is also reported quarterly and annually.

The same sorts of measurement problems facing GDP also apply to GNP. The same relation exists between GDP and society's welfare as that between GNP and society's welfare. The same real and nominal interpretation applies to GNP as to GDP.

<= GROSS DOMESTIC PRODUCT, WELFAREGROSS PRIVATE DOMESTIC INVESTMENT =>


Recommended Citation:

GROSS NATIONAL PRODUCT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: September 28, 2020].


Check Out These Related Terms...

     | gross domestic product | net domestic product | national income | personal income | disposable income | gross national product | real gross domestic product |


Or For A Little Background...

     | net foreign factor income | foreign sector | National Income and Product Accounts | Bureau of Economic Analysis |


And For Further Study...

     | macroeconomic problems | macroeconomic theories | macroeconomic sectors | circular flow | business cycles | stabilization policies | gross domestic product, ins and outs | gross domestic product, welfare | gross domestic product, expenditures | gross domestic product, income | unemployment | inflation |


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