Why may welfare rise even with a limited change in GDP if public transport becomes cheaper and faster?
Answer and explanation
Correct answer: Because time and travel costs are saved
The governing concept is that GDP does not capture every improvement in welfare. Cheaper and faster public transport reduces fares and commuting time, leaving people with more money and time for work, rest, education, or family activities. Therefore, option B is correct. Tax abolition, population decline, or vehicle imports do not necessarily follow from better transport and do not explain the welfare gain.
Frequently asked questions
What is the correct answer to this question?
Because time and travel costs are saved
Why is this the correct answer?
The governing concept is that GDP does not capture every improvement in welfare. Cheaper and faster public transport reduces fares and commuting time, leaving people with more money and time for work, rest, education, or family activities. Therefore, option B is correct. Tax abolition, population decline, or vehicle imports do not necessarily follow from better transport and do not explain the welfare gain.
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.
