Question

Increase in per capita real income means increase in per capital availability of goods and services. Does it necessarily mean rise in the welfare of the people of the country ? Give any one argument in support of your answer and exaplain the same.

Answer 1

Increase in per capital real income brings increase in per capita availability of goods and services and consequently welfare would also rise, but it may not necessarily always be so. For example, if increase in industrialisation is the outcome of increase in number of manufacturing units like factories, buildings, industries, it surely will increase the level of output and income, but at the same time it will also cause water, air and noise pollution leading to increased medical bills, laundary bills etc. Hence it will bring overall reduction in welfare of perople.