Output increased in an economy, but the income of small producers fell. What does this show?
Answer and explanation
Correct answer: The benefits of growth were distributed unequally
The governing concept is that aggregate economic growth and distributional welfare are different ideas. Total output can rise while market power, technology, competition or changing demand reduce the income received by small producers. Therefore option A is correct: the gains from growth were not shared equally. Option B is unsupported, C contradicts the stated fact, and D cannot be inferred because no general price information is provided.
Frequently asked questions
What is the correct answer to this question?
The benefits of growth were distributed unequally
Why is this the correct answer?
The governing concept is that aggregate economic growth and distributional welfare are different ideas. Total output can rise while market power, technology, competition or changing demand reduce the income received by small producers. Therefore option A is correct: the gains from growth were not shared equally. Option B is unsupported, C contradicts the stated fact, and D cannot be inferred because no general price information is provided.
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.
