If an industry's output rises but workplace safety worsens, why may GDP overstate welfare?
Answer and explanation
Correct answer: Because accident risk and health loss are not recorded
GDP primarily measures the market value of final goods and services produced, not every non-market cost associated with production. Greater output may raise measured GDP, while unsafe conditions create accident risks, illness, stress, and medical or social costs that are not fully subtracted from that figure. Therefore GDP can rise even when workers' well-being declines. Option C correctly identifies this limitation; the other options wrongly deny output measurement or change the location or employment facts.
Frequently asked questions
What is the correct answer to this question?
Because accident risk and health loss are not recorded
Why is this the correct answer?
GDP primarily measures the market value of final goods and services produced, not every non-market cost associated with production. Greater output may raise measured GDP, while unsafe conditions create accident risks, illness, stress, and medical or social costs that are not fully subtracted from that figure. Therefore GDP can rise even when workers' well-being declines. Option C correctly identifies this limitation; the other options wrongly deny output measurement or change the location or employment facts.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
