Why is additional income more important for a poor family when much of its income is spent on food and housing?
Answer and explanation
Correct answer: Because it improves satisfaction of basic needs
A poor family usually has unmet essential needs, such as sufficient food, safe housing, clothing, and healthcare. Additional income can directly improve these necessities, so its marginal utility is relatively high. Option B is correct because welfare rises when basic needs are better satisfied. The other options concern output, population, or prices and do not explain why extra income matters more to the poor.
Frequently asked questions
What is the correct answer to this question?
Because it improves satisfaction of basic needs
Why is this the correct answer?
A poor family usually has unmet essential needs, such as sufficient food, safe housing, clothing, and healthcare. Additional income can directly improve these necessities, so its marginal utility is relatively high. Option B is correct because welfare rises when basic needs are better satisfied. The other options concern output, population, or prices and do not explain why extra income matters more to the poor.
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.
