Page 6 - Understanding Economics for Class 10

beneficial at a national level but who so ever loses their houses and shops because of it
might not be aligned in this development process.
 Similarly, the development of more housing societies is good for the people who will
reside their but it is leading to disappearance of parks impacting children the most.
Goyal Brothers Prakashan
hoW to compare Different countries or states?
 Typically, we take one or more significant traits of individuals and compare them based on
these characteristics and to compare countries, their income taken as the most significant aspect.
Countries with higher income are more developed than others with less income. Therefore,
the income of the country and of all the residents of the country is taken into consideration.
 For comparison between countries, total income is not an appropriate criterion. Hence,
we compare the average income of different nations which is the total income divided by
its total population and is known as average income also known as per capita income.
 In World Development Report by the World Bank in year 2019, countries with per capita
income of USD 43900 per annum are called rich countries and those with per capita
income of USD 2500 or less are called low-income countries. India comes in the category
of low middle-income countries having a per capita income of bare USD 6700.

average income
 Average is twin edged sword – its good for comparison purpose but ignores the impact
for extreme disparity.
Monthly incomes of citizens (in Rupees)
Country
I II III IV V Average
Country A 9500 10500 9800 10000 10200

Country B 500 500 500 500 48000
 If we look here then, average of both the countries is similar but country A has a better
equitable distribution which indicates a better situation then at country B.

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Let’s Work these out (Page No. 9)
1. Give three examples where an average is used for comparing situations.
Ans. Average income of two countries, average speed of two vehicles over a distance and
average height of the students in two different classes of a school.

2. Why do you think average income is an important criterion for development? Explain.
Ans. It is an important criterion because it tells us what an average person is likely to earn and
also gives some idea about the rising standard of living. Prosperity of a country depends not
only on its national income but also on the number of people who would share it. In case
the number of people is large, the average income will be less. This is the case in India.
E-4 Economics Class X