New factories increased employment in a city but polluted the river. How should welfare be assessed?
Answer and explanation
Correct answer: By considering both employment gains and environmental losses
Welfare assessment must include both beneficial and harmful effects of economic activity. New factories may raise employment, incomes and production, but river pollution can impose health costs, reduce clean water and damage ecosystems. Therefore option D is correct because it considers the net social effect. Options A, B and C each use only one indicator and consequently ignore important benefits or costs.
Frequently asked questions
What is the correct answer to this question?
By considering both employment gains and environmental losses
Why is this the correct answer?
Welfare assessment must include both beneficial and harmful effects of economic activity. New factories may raise employment, incomes and production, but river pollution can impose health costs, reduce clean water and damage ecosystems. Therefore option D is correct because it considers the net social effect. Options A, B and C each use only one indicator and consequently ignore important benefits or costs.
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.
