Question

How is per capita income a better measure of development than the national income?

Answer 1

National income is the total income of a country. Two countries may have equal national income but they may not be equally developed. It is because national income does not tell whether it is sufficient for all the residents of that country. This can be measured by finding the average or the per capita income of the country.

For example, country A has a national income of 5000 crore dollars and a population of hundred crores. Therefore, its per capita income is fifty dollars (5000 crore100 crore).

Country B also has a national income of 5000 crore dollars but a population of fifty crores only. Therefore, its per capita income is hundred dollars (5000 crore50 crore).

Clearly, we can say that country B, with a higher per capita income is more developed than country A.