Question

1 What is per capital income? Mention any two limitations of per
capital income as an indicator of development.​

Answer 1

Explanation:

Limitations of Per capita income as an indicator of development:

1.It does not indicate the disparities in the distribution of incomes .

Example:The wide gap between the incomes of the extremely rich and very poor people.

2.It does not indicate long term sustainability as non renewable resources are liable to be exhausted.

3.The method of calculting per capita income also varies among different countries.Thus,it is not highly reliable for comparison.

4.The data represented by per only theoritically possible and not practically.

5.It does not play a major part in classification of nation.

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Answer 2

Hey Mate !

Per capita income

Per capita income or average income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area's total income by its total population. Per capita income is national income divided by population size.

Limitations of per capita income are :

• A rise in per capita income is due to rise in prices and not due to increase in physical output, it is not a reliable index of economic development.
• National income rises but its distribution makes the rich richer and the poor poorer.

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