Two economies have equal real GDP per capita but the first has more public parks and cleaner air. What is a likely conclusion?
Answer and explanation
Correct answer: The first economy may have higher welfare
Real GDP per capita measures the value of marketed final goods and services after removing price changes, but it is not a complete measure of welfare. Public parks, cleaner air, leisure, safety and other non-market amenities can improve people’s quality of life. Therefore, with equal real GDP per person, the first economy may have higher welfare. Option B is too absolute, while C contradicts the stated equality and D ignores environmental and social benefits.
Frequently asked questions
What is the correct answer to this question?
The first economy may have higher welfare
Why is this the correct answer?
Real GDP per capita measures the value of marketed final goods and services after removing price changes, but it is not a complete measure of welfare. Public parks, cleaner air, leisure, safety and other non-market amenities can improve people’s quality of life. Therefore, with equal real GDP per person, the first economy may have higher welfare. Option B is too absolute, while C contradicts the stated equality and D ignores environmental and social benefits.
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.
