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Why can average per capita income be misleading when income distribution is highly unequal?

Answer and explanation

Correct answer: It may not represent the actual income of most people

Per capita income is an arithmetic average: total income divided by population. A very rich minority can receive a large share of income and raise this average, even when most households earn far less. The average therefore does not reveal the median person’s income or the distribution of resources. Option D is correct. A does not follow from the formula, B is plainly false, and C confuses income with a price measure.

Related tags

Average IncomeInequalityPer Capita IncomeWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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