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Why does GDP per capita become a weak welfare indicator when a large share of national income goes to a few individuals?

Answer and explanation

Correct answer: Because it is an average and hides distribution

GDP per capita is calculated as total GDP divided by population, so it is an arithmetic average rather than a description of each person’s income or consumption. A high average can coexist with poverty if most income is concentrated among a small group. Thus option A is correct. It does not measure only exports, it is based on real or nominal output as specified, and population is used as a divisor, not multiplied.

Related tags

GdpWelfarePer-CapitaInequalityAverage-IncomeGdp And WelfareNational Income And Related AggregatesEconomics

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