Which of the statement regarding Average Income is correct?

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Average income is not used to compare development

Average income hides disparity.

Total income is better than it

None of these

answer is B.

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Detailed Solution

The correct statement is Average income hides disparity.
Average income is calculated by dividing the total income of a region by the total population. It means that the per capita income does not show the difference in income of two people. Let us consider an exemplification of the same. A country named XYZ has two people, A and B. The income of A is Rs. 5000 whereas the income of B is Rs. 500. On calculating the average income, the income per individual will come out to be Rs. 2,750. This calculation has reduced the income earned by A and increased the income earned by B. As a result, we observe that average income hides the disparity in income.

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