The standard of living in two countries can be compared using the___________

Analyze the question: It asks which measure is used to compare the standard of living between two countries.

Explain the concept: Standard of living refers to the level of material well-being of people in a country, meaning how much goods and services the average person can afford. To compare it across countries, we need a measure that reflects the average person's share of output, not just the total size of the economy.

The usual measure is per capita income, which is national income (or GNP) divided by population:

Per capita income = Total GNP ÷ Total population

Step-by-step evaluation of options:

• A. Number of industries: This shows industrial development, not how well people live. A country can have many industries and still have a low average income per person. ❌
• B. Size of arms and ammunition: This reflects military strength, not people's welfare. ❌
• C. Size of national incomes only: Total national income ignores population size. For example, Nigeria's total GDP can be larger than that of a small country, yet the average citizen of the smaller country may be much better off. The word "only" makes this option weak. ❌
• D. Gross national product per head: This is GNP divided by population, i.e. per capita income. It shows the average income per person and allows a fair comparison between countries of different sizes. ✔️

Exam tip: Whenever you see "compare standard of living" in Economics, think "per capita" or "per head." Total figures (like total GNP) tell you the size of an economy, while per-head figures tell you how well the average person lives. Also note that real per capita income (adjusted for inflation) is even better, but it is not listed here.