Question

Per capita income is not a true criterion of individual income. Give reason.

Answer 1

• When we divide gross national income with total population of a nation we get the per capita income of the nation.
• As per this definition, per capita income is just a simple mathematical average. It does not show the spread of income among individuals.
• Since, PCI is an average income of entire nation, some individuals might be earning less and some more. Hence, PCI is just an indicative figure and not a true criterion of individual income.