Final answer:
Per capita income cannot reflect the true state of economic development because GDP per capita is an average that may hide income distribution among society. It also overlooks variety in markets and higher level priorities.
Step-by-step explanation:
'Per capita income cannot reflect the true state of economic development'—this statement is justified because GDP per capita is an average that may mask the true distribution of income within a society. GDP growth does not necessarily indicate that all groups within a society are better off; some may experience much larger increases in their income while others may see a decline. Furthermore, GDP does not account for the variety and choice available in the market. The diversity of options, such as having different types of bread to choose from, illustrates a dimension of economic welfare that GDP does not capture.
Moreover, GDP overlooks aspects like income inequality and environmental protection. Economists recognize that at higher income levels, societies may prioritize sustainability over output, which GDP calculations do not reflect. Thus, mere GDP figures do not provide a comprehensive measure of a society's standard of living or the quality and variety of goods and services available to its citizens.