Identify the scenario which would lead to an increase in GDP, but might not necessarily improve overall welfare?

Option 1 -> Reduction in income inequality improves welfare by distributing wealth more equitably, benefiting society overall.

Option 2 -> Rapid infrastructure growth increases GDP and generally enhances welfare through improved connectivity and services.

Option 3 -> Expansion of environmentally harmful industries boosts production and GDP, but causes pollution, health issues, and resource depletion that harm overall welfare.

Option 4 -> Government investment in education and healthcare increases GDP while directly improving human capital and well-being.

Hence, Option 3: Expansion of environmentally harmful industries -> This scenario demonstrates the limitation of GDP as a welfare measure. While such industries increase economic output and GDP through production and employment, they generate negative externalities like air and water pollution, health problems, climate change impacts, and ecosystem destruction. These costs are not reflected in GDP calculations, meaning welfare can decline even as GDP rises. This illustrates why GDP alone is insufficient for measuring societal well-being and why sustainable development indicators are necessary. -> correct