why do we use averages are there any limitations to their use illustrate with your own examples related to development
Answers
Answer:
We use averages as they are useful for comparing differing quantities of the same category. ... There are limitations of calculating averages because this does not give any information about the distribution of a thing between people. For example, the per capita income does not show the distribution of income.
Answer:
Different countries have different populations, so calculating the average income or the per capita income of a country helps in telling how much income an average person of the country is likely to earn. But this method of finding averages does not reflect the unequal distribution of incomes in the country. Moreover, it is only an average value, so it does not tell the actual income status of the country.
For example, if we calculate the per capita income of two countries A and B with 5 people each, the salary of five people in country A is Rs.23,000, Rs.22,000, Rs.23,500, Rs.28,000 and Rs.25,000 and the income of people living in country B are Rs.1,50,000, Rs. 22,000, Rs.50,000, Rs.4000, Rs.2500. The average income of country A will be Rs.24,300, and that of country B will be Rs.45,700. This proves that the average of country B is higher than that of country A, and yet there is a disparity in the income distribution of country B and the income is evenly distributed in country A.
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