If families receive safer housing while house-market prices do not change, what may happen to welfare?
Answer and explanation
Correct answer: Welfare may rise because safety improved
Welfare includes quality-of-life benefits that may not be fully captured by market prices. Safer housing can reduce the risk of injury, illness, insecurity, and financial loss, even when its recorded price remains unchanged. These improvements increase residents' well-being without necessarily changing GDP or the market valuation of the houses. Therefore option A is correct. The unchanged price does not prove that welfare is unchanged, and the other options make unjustified absolute claims.
Frequently asked questions
What is the correct answer to this question?
Welfare may rise because safety improved
Why is this the correct answer?
Welfare includes quality-of-life benefits that may not be fully captured by market prices. Safer housing can reduce the risk of injury, illness, insecurity, and financial loss, even when its recorded price remains unchanged. These improvements increase residents' well-being without necessarily changing GDP or the market valuation of the houses. Therefore option A is correct. The unchanged price does not prove that welfare is unchanged, and the other options make unjustified absolute claims.
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.
