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Per Capita GDP
> Relationship between Per Capita GDP and Standard of Living

### What is the definition of per capita GDP and how is it calculated?

Per capita GDP, also known as per capita gross domestic product, is a measure used to assess the economic well-being and standard of living of a country's population. It represents the average economic output per person within a given country or region. Per capita GDP is calculated by dividing the total gross domestic product (GDP) of a country by its population.

To understand the calculation of per capita GDP, it is important to first grasp the concept of GDP. GDP is a widely used indicator that measures the total value of all goods and services produced within a country's borders during a specific period, typically a year. It encompasses various economic activities such as consumption, investment, government spending, and net exports (exports minus imports).

The formula for calculating per capita GDP is relatively straightforward. It involves dividing the total GDP of a country by its population size. Mathematically, it can be expressed as:

Per Capita GDP = Total GDP / Population

For example, let's consider a hypothetical country called "Economia" with a total GDP of \$500 billion and a population of 10 million people. To calculate the per capita GDP of Economia, we would divide the total GDP by the population:

Per Capita GDP = \$500 billion / 10 million = \$50,000

Therefore, in this scenario, the per capita GDP of Economia would be \$50,000.

Per capita GDP serves as an essential economic indicator as it provides insights into the average economic output and income level of individuals within a country. It allows for comparisons between different countries or regions and helps in assessing their relative economic performance and standard of living.

It is important to note that per capita GDP has its limitations as a measure of well-being. While it provides an average figure, it does not capture income distribution within a country. Disparities in income distribution can significantly impact the standard of living experienced by different segments of the population. Additionally, per capita GDP does not account for non-monetary factors such as access to healthcare, education, and overall quality of life, which are crucial aspects of assessing the standard of living.

In conclusion, per capita GDP is a measure that quantifies the average economic output per person within a country or region. It is calculated by dividing the total GDP of a country by its population size. Per capita GDP serves as an important indicator for comparing the economic well-being and standard of living across different countries, although it has limitations in capturing income distribution and non-monetary factors.