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If polluting production raises conventional NDP by ₹850 crore while estimated environmental damage is ₹1,100 crore, what is the most appropriate conclusion?

Answer and explanation

Correct answer: Conventional NDP rises, but net welfare may fall

Conventional NDP can record the value of production without fully subtracting environmental damage. So it may rise by ₹850 crore even as environmental costs reduce welfare. If the two amounts are comparable and the damage is counted, the net change after this cost is ₹850 crore − ₹1,100 crore = −₹250 crore. Option A is the appropriate conclusion.

Related tags

Ndp And WelfareEnvironmental CostsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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