Explain five reasons why the per capita income may not be considered as a good measure for comparing economic welfare level of different countries.

      

Explain five reasons why the per capita income may not be considered as a good measure for
comparing economic welfare level of different countries.

  

Answers


kinyua
i. Difference in computation methods/degree of accuracy may give different income figures which
may not be a true reflection on what is on the ground.
ii. Difference in economic structures as different countries have different economic structures
making measuring national income to be difficult.
iii. Difference in income distribution level, the income in different countries may not be
proportionately distributed to the citizens of the country hence not being a good measure of
economic welfare.
iv. Differences in expenditure pattern/priorities/tasks/preferences making the comparison difficult
because the consumption level of different countries have different
taste/preference/priorities/expenditure.
v. Differences in price levels in different countries as high income level may be as a result of high
prices of goods meaning cost of living is high causing the reverse in economic welfare.
vi. Different level of infrastructural development in different countries.
vii. Different levels of resource endownment i.e climatic condition making levels of national income
to differ.
monica20 answered the question on October 14, 2017 at 10:06


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