Question

Why can a country with a high per capita income still have a large portion of its population living in poverty?

• A. The government heavily subsidizes luxury goods, leaving little for essential services.
• B. Most of the population engages in informal sector employment with fluctuating incomes.
• C. The income is highly concentrated in the hands of a small number of people.
• D. High per capita income is driven by oil exports, which do not benefit the general population.

Answer 1

Answer:

C. The income is highly concentrated in the hands of a small number of people.

• This is the core issue with using an average.

• A few very high incomes can artificially raise the average, masking the fact that the majority of people have very low incomes.