The use and limitations of national income data to compare differences in living standards between countries
Economists use GDP per capita — a country's total output divided by its population — to compare living standards across countries. But this figure can mislead, because it hides inequality, ignores unpaid work, and overlooks differences in what money can actually buy.
Real World
Qatar has one of the world's highest GDP per capita figures (around $83,000), yet a large portion accrues to a small citizen elite while migrant workers — who make up nearly 90% of the population — earn a fraction of that, illustrating how inequality distorts cross-country comparisons.
Exam Focus
For 'assess' questions, counter any GDP comparison with a specific limitation (inequality, shadow economy, or non-market output) to access Level 3 marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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