Question: Why do we use averages to compare the development of countries? What are the limitations in using it? Explain. (Board Term-I, (70), 2012)
Answer: Use of averages to compare development :
(i) Averages are used for better understanding.
(ii) For comparison between countries, total income is not very useful.
(iii) Different countries have different populations, so total income will not tell us what an average person is likely to earn.
(iv) According to the World Bank, countries with per capita income of US $ 12616 per annum and above in 2012 are called rich countries, and those below US $ 1035 per annum or less are poor.
Limitation: Average income does not depict how the income is distributed among the people. Some may be very rich but the masses may be poor.