CBSE Notes, Lectures

CBSE - Economics - Development


Short Answer Type

Why average income is taken into consideration instead of total income while making comparison between countries?

The total income of the country is the income of all the residents of the country. For comparison between
countries, total income is not such a useful measure. Since countries have different population, comparing total
income will not tell us what an average people is likely to earn. Hence we compare the average income which is
the total income of the country divided by its total population. 

So, Average income = Total income /  Total population
The average income is also called per capita income.