In which situation can consumer welfare rise without an increase in GDP?
Answer and explanation
Correct answer: Product quality improves at the same price
Consumer welfare depends not only on the measured value of output but also on quality and satisfaction. If a product becomes better while its price remains unchanged, consumers receive greater value and utility even though recorded expenditure and GDP may not rise. Option D is therefore correct. Higher prices with lower quality, more pollution, or longer working hours do not necessarily improve welfare.
Frequently asked questions
What is the correct answer to this question?
Product quality improves at the same price
Why is this the correct answer?
Consumer welfare depends not only on the measured value of output but also on quality and satisfaction. If a product becomes better while its price remains unchanged, consumers receive greater value and utility even though recorded expenditure and GDP may not rise. Option D is therefore correct. Higher prices with lower quality, more pollution, or longer working hours do not necessarily improve welfare.
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.
