Chapter 1 Solutions — Development

Development is a many-sided idea. Different people have different developmental goals, and a single indicator cannot capture the well-being of a country's citizens.

The chapter uses per capita income (a World Bank criterion), and also health and education indicators (used in the UNDP's Human Development Report) to compare development. Since all three — income, literacy and health — are used together, the correct choice is 'all the above'.

The main criterion used by the World Bank to classify countries is the per capita income (average income), i.e. the total income of the country divided by its total population. Countries with higher per capita income are called rich (developed) and those with low per capita income are called low-income countries.

Limitations: Per capita income is only an average, so it hides distribution — it does not show how income is divided among people, and a high average can coexist with a few very rich and many very poor people. It also ignores non-income aspects of development such as health, education, equal treatment, a pollution-free environment and security, which are equally important for people's quality of life.

Average per capita income = (total income of all families) / (number of families).

Total income of four families = average x number = 5000 x 4 = Rs 20,000. Income of three families = 4000 + 7000 + 3000 = Rs 14,000.

Income of the fourth family = 20,000 - 14,000 = Rs 6,000.