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Average income hides disparities, illustrated by the chapter using two hypothetical countries A and B. In Country B,
Aall citizens have equal incomes
Bfour citizens have ₹500 each and one has ₹48,000 — same average but extreme inequality
Cincome tax is highest
Dincome is shared by lottery
Answer & Solution
Correct answer: B. four citizens have ₹500 each and one has ₹48,000 — same average but extreme inequality
1. Country A: incomes ₹9,500–₹10,500 (fairly equal).
2. Country B: four citizens at ₹500 and one at ₹48,000 — same average ₹10,000 but extreme inequality.
3. Same per capita income hides the inequality story — Country A is preferred.
_Source: NCERT Class 10 Understanding Economic Development, Ch 1 "Development"_
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