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If drinking-water quality deteriorates while output rises, how should welfare be assessed?

Answer and explanation

Correct answer: By considering both output gains and health losses

GDP records the value of measured production, but it does not automatically subtract the health damage caused by polluted drinking water. A proper welfare assessment must compare the benefit from higher output with medical costs, illness, lost work, and reduced quality of life. Therefore C is correct. A, B, and D use only one limited indicator and ignore the negative social cost of deteriorating water quality.

Related tags

Water QualityHealth CostGdpWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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