Q.What is the relationship between population and per capita income?
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Start your 14-day free trial to unlock the full solution →Per Capita Income = National Income ÷ Population. Hence per capita income depends on both national income and the size of the population. For a given national income, a rise in population lowers per capita income and a fall in population raises it — an inverse relationship. Per capita income rises only when national income grows faster than population.
The relationship
Per capita income means the average income of a person in a country. It is found by the formula:
Per Capita Income = National Income / Total Population.
From this formula it is clear that per capita income depends on two things — the size of national income and the size of the population.
Effect of population on per capita income
- If national income remains constant and population increases, per capita income falls; if population decreases, per capita income rises. In this sense population and per capita income are inversely (negatively) related.
- If population remains constant and national income increases, per capita income rises.
- When both change: per capita income rises only if national income grows faster than population; it falls if population grows faster than national income.
Importance for a developing country …
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