Question

what is per capita income? what is its demerit to be taken as index comparison​

Answer 1

Answer:

Per capita income (PCI) or average income measures the average income earned per person. Per capita income is often used to measure a country's standard of living.

Limitations of per capita income are :

(i) 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.

(ii) National income rises but its distribution makes the rich richer and the poor poorer.

(iii) It excludes all non-marketed goods and services, even though they may be important for human happiness and better quality of life.

(iv) Rise in per capita income may be due to use of modern capital intensive technology in production which may be labour displacing in nature thus adversely affecting the poor masses.

(v) If rate of population growth, is higher than the rate of growth of national income, this will lead to fall in per capita availability of goods and services and economic welfare.

(vi) Contribution of commodity to economic welfare may be higher than its money value e.g., money value of salt, needle, thread, etc. included in national income is lower than their contribution to economic welfare.

Answer 2

Here Is Your Ans ⤵

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Per capita income is defined as the total income of the country divided by total population of that particular country

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Demerits of Per capita income :

# Per capita income does not describes the condition of country's people

# Calculating per capita income varies from countries to countries

# Per capita income decreases the role of rich and poor and shows that all the people are having the same income,which is wrong

# Per capita income does not tells us about the other factors like literacy rate,net attendence ratio,etc

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