Chapter 1

NCERT
Class 10
Economics
Solutions
6. Why do we use averages? Are there any limitations to their use? Illustrate with your own examples related to development.

Question:

Why do we use averages? Are there any limitations to their use? Illustrate with your own examples related to development.

Answer:

Total income is not a suitable measure for comparison between two countries as the population of different countries varies, hence the average is used. The limitation of its use is that it does not show us the exact distribution of income among people.

Average is used to estimate any subject or area at different levels. Like all the people in a country get different income, but to know the development level of the country, per capita income is derived, which is derived through the average. This gives us an idea of the level of development of a country. But there are many problems in using the average. Nothing can be accurately estimated from the average. In this, inequalities are hidden. For example, three out of four families living in a country earn ` 400 each and one family is earning ` 47,000, while in another country all families earn between ` 9,000 and ` 8,000. Both the countries have the same average income but in one country the economic inequality is very high, while in the other country all the citizens are at the same level economically. Thus this average is useful for comparison but it hides disparities. This does not show that this income. How is it distributed among people?

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