Question

Why is average income used for comparing development of economies? Explain the limitations
in their use.

Answer 1

Answer:

Income can enable people to at least make provision for basic necessities of life. If the average income of a country is on a higher side, its chances of faring better on development index are better. Hence, average income can be an important criterion for development.

Explanation:

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Answer 2

(i) Averages are used for better understanding.

(ii) For comparison between countries, total income is not very useful.

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.

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