Q.Write a short note on: Per Capita Income

Per capita income is the average income per person in a year, found by dividing national income by total population. It is a common measure of the standard of living and is used to compare countries, but it hides inequalities in the distribution of income.

Meaning

Per capita income is the average income of an individual in a country in a given year. It is calculated by the formula:

Per capita income = National income of the country / Total population of the country.

Explanation

For example, if the national income of a country is a certain total and its population is known, dividing the first by the second gives the income available on an average to each person.

Per capita income is widely used:

• as an index of the standard of living and economic welfare of the people;
• to compare the level of development of different countries; and
• to measure economic growth over time, when it rises in real terms.

Limitation (noted honestly)

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