Final answer:
A major event in PEI would likely have a positive impact on its GDP due to visitor spending and the multiplier effect. However, the overall benefit might be nuanced, considering not all GDP increases reflect social well-being. The timing of the event (peak vs. off-season) also affects the net economic benefit calculation.
Step-by-step explanation:
The impact on the GDP of PEI from a major event attracting tourists would likely be positive, as expenditures by visitors on accommodations, food, entertainment, and other services contribute to the region's economic output. Moreover, this can cause a multiplier effect where the initial spending circulates through the local economy, increasing the overall economic activity more than the initial financial injection.
Whether the increased GDP from such events is solely beneficial is debatable. Factors like the opportunity cost, environmental impact, and the nature of the expenditures should be considered. Some argue that not all spending represents a true gain to society's standard of living, and a hurricane-induced surge in construction or spending due to fear of crime would not equate to a net societal benefit even if they increase GDP.
The difference in calculating the benefit of such an event during peak versus off-season lies in the elasticity of the local economy. In the off-season, the additional tourist spending is more likely to represent a net gain, filling in for otherwise unutilized resources. During peak season, the event might displace other tourists, leading to a potential overestimation of its economic impact.