Why do we use averages?Explain the benefits of using averages.Are there any limitations to it?Enumerate
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Answer:
We use averages for comparisons across different classes. Limiatations of Using Averages : Averages calculate only the mean availability but they hide the disparities in the process. This is the main limitation of using averages. Let us consider two countries A and B, each having 4 citizens.
From the above example, we observe that in country B all citizens have the graduate level of education. There are fewer disparities in this country whereas in country A, half the citizens are illiterate or of primary education level whereas the other half are doctrates or post graduates. Therefore, even though average education level of both A and B is graduate level, yet there are great disparities between them.
We use averages because they are useful for comparing differing quantities of the same category.
For example, to compute the per capita income of a country, averages have to be used because there are differences in the incomes of diverse people. However, there are limitations to the use of averages. This does not show the distribution of thing between people. For an example, suppose in a country, the annual income of a rickshaw puller is Rs 8,000 while an MNC employee earns an annual package of Rs 12,00,000. The average income of this country, therefore, will be Rs 6,05,000. Here actual income or status remains unknown. One can clearly consider this as a rich country thereby ignoring the income disparity between two individuals. Averages are useful for comparison, they also hide disparities.