Why do we use averages? What are the limitations to their use
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Answered by
10
hi,
Averages are used to compare different countries, states, or regions. Since countries have different populations, comparing total income will not tell us what an average person is likely to earn. Averages have many limitations.
(a) They don’t give us the true picture regarding the distribution of income.
(b) Averages don’t give us any information regarding the non-materialistic goods and services.
Limitations of Average Income
While averages are useful for comparison, they also hide disparities.
For example: let us consider two countries- A and B. For the sake of simplicity, we have assumed that they have only five citizens each. Based on the data given in the table, let us calculate the average income for both the countries.
Averages are used to compare different countries, states, or regions. Since countries have different populations, comparing total income will not tell us what an average person is likely to earn. Averages have many limitations.
(a) They don’t give us the true picture regarding the distribution of income.
(b) Averages don’t give us any information regarding the non-materialistic goods and services.
Limitations of Average Income
While averages are useful for comparison, they also hide disparities.
For example: let us consider two countries- A and B. For the sake of simplicity, we have assumed that they have only five citizens each. Based on the data given in the table, let us calculate the average income for both the countries.
Answered by
3
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
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