If the quality of public education improves without an increase in fees, what difference may arise between actual welfare and GDP?
Answer and explanation
Correct answer: Welfare may rise while the full value of quality improvement is not reflected in GDP
The relevant concept is the measurement of government services. Public education may be recorded using the cost of providing the service, such as salaries and inputs, rather than the full improvement in educational quality. Better teaching can therefore raise students’ capabilities and welfare even when fees and measured costs barely change. C follows; A assumes equality, B reverses the effect, and D is too absolute.
Frequently asked questions
What is the correct answer to this question?
Welfare may rise while the full value of quality improvement is not reflected in GDP
Why is this the correct answer?
The relevant concept is the measurement of government services. Public education may be recorded using the cost of providing the service, such as salaries and inputs, rather than the full improvement in educational quality. Better teaching can therefore raise students’ capabilities and welfare even when fees and measured costs barely change. C follows; A assumes equality, B reverses the effect, and D is too absolute.
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.
