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Output increased in an economy, but the income of small producers fell. What does this show?

Answer and explanation

Correct answer: The benefits of growth were distributed unequally

The governing concept is that aggregate economic growth and distributional welfare are different ideas. Total output can rise while market power, technology, competition or changing demand reduce the income received by small producers. Therefore option A is correct: the gains from growth were not shared equally. Option B is unsupported, C contradicts the stated fact, and D cannot be inferred because no general price information is provided.

Related tags

Economic GrowthIncome DistributionSmall ProducersWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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