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What is a limitation of per capita GDP?

Answer and explanation

Correct answer: It does not show income distribution

Per capita GDP is calculated as total GDP divided by population, so it provides an average amount of output or income per person. However, an average does not reveal how that total is distributed. A small wealthy group may receive most income while many people remain poor, even when per capita GDP is high. Therefore option B is correct. Options A and C deny its averaging and population basis, while D is plainly false.

Related tags

Per Capita GdpIncome DistributionAverageInequalityGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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