Question

In: Economics

a) Under what conditions might increase in average Incomes Per Capita not translate into greater human...

a) Under what conditions might increase in average Incomes Per Capita not translate into greater human development?

b) Give three specific examples and explain.

Solutions

Expert Solution

A developed economy is one with security, high per capita income, and advanced technological infrastructure.

If the per capita gross domestic product is high but a country has poor infrastructure and income inequality, then it would not be considered as a developed economy.

Examples:

1) Per capita income is useful for evaluating an area's affordability

It can be used in coordinating with data on real estate prices. For instance, to help determine if average homes are out of reach for the average family. The badly expensive areas such as San Francisco maintain extremely high ratios of average home prices to income per capita.

2) Businesses can also use per capita income

When considered opening a store in a town. If a town's population has a high per capita income, the company might have a better chance at generating revenue from selling their goods since the people would have more spending money versus a town with low per capita income.

3) To discover an area's wealth

The income per capita is one metric the U.S. Bureau of Economic Analysis (BEA) uses to rank the wealthiest counties in the United States, the other being median household income.


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