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.
Frequently asked questions
What is the correct answer to this question?
By considering both output gains and health losses
Why is this the correct answer?
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.
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.
