If polluting production raises NDP by 850 crore rupees but estimated environmental damage is 1,100 crore rupees, what is the most appropriate conclusion?
Answer and explanation
Correct answer: Conventional NDP rises, but net welfare may fall
Conventional NDP records the value of measured production, but it does not automatically subtract every environmental cost. Thus NDP may rise by 850 crore rupees even when environmental damage is 1,100 crore rupees. If that damage is considered, overall or net welfare may decline. Therefore, option A is correct. The other choices wrongly equate NDP with welfare or with ordinary depreciation.
Frequently asked questions
What is the correct answer to this question?
Conventional NDP rises, but net welfare may fall
Why is this the correct answer?
Conventional NDP records the value of measured production, but it does not automatically subtract every environmental cost. Thus NDP may rise by 850 crore rupees even when environmental damage is 1,100 crore rupees. If that damage is considered, overall or net welfare may decline. Therefore, option A is correct. The other choices wrongly equate NDP with welfare or with ordinary depreciation.
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.
