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What is a possible limitation of per capita income as an indicator of economic welfare?

Answer and explanation

Correct answer: It does not fully show the distribution of income

Per capita income is calculated by dividing national income by the population, so it represents an average income. An average can conceal substantial inequality: two countries may have the same per capita income even though income is evenly distributed in one and concentrated among a small group in the other. Therefore, option A is correct.

Related tags

Per-Capita-IncomeIncome-DistributionEconomic-WelfareLimitationsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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