1) 2) 7) Per capita income is a measure of purchasing power _ People who live and work in developing countries oen nd that their incomes are meagre when buying an international airline ticket :making an international phone call ,se-nding an airmail letter to a friend who lives abroad ,buying a book published by an international publisher , or importing consumer goods .They don't feel that poor when they buy vegetables at the local store , get haircut = travel domestically by train = bus , or even by taxi , or buy a local textbook Use these intuitive comments tolmderstand what atraded good is and what anon t:raded good is. Note that a potentially tradable good may become e'ectively non traded because of import or export restrictions .Why are non -traded goods generally cheaper in poor countries 17 In addition ,if they are cheaper ,would their incomes look better (relative to the United States , say) when measured by the exchange -rate method or by the PPP method '3' McDonald's operates in various countries .It has been found that the relative price of a Big hiac is a better guide to the overall cost of living than estimates using the exchange rate_Why do you think this might be the case? Think of various indicators of development that you would like to see in your concept of "economic development _" Think about why per capita income , as measured : may or may not be a good proxy for these indicators .Find a copy of the Human Development Report and look at it to see how di'erent indicators are combined to get the HI'II . Do you think that method of combination is reasonable 7:\" Can you suggest a better combination '3' What do you think of the idea of presenting data on each of the indicators separately ,instead of combining them '_' Tnink of the advantages and disadvantages of such an approach A cogent example in which per capita magnitudes may be misleading if we do not have a good idea of distribution comes from the study of modern famine . Why do famines simpty not make sense if we look at them from the viewpoint of worldwide per capita