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Answer: Per capita income is defined as the average income earned per person in a given area (city, region, country) in a specified year. It is calculated by dividing the total income of a country by its total population. **Formula:** [ text{Per capita income} = frac{text{Total National Income}}{text{Total Population}} ] Per capita income is considered an important indicator for comparing the development levels of different countries for several reasons: 1. **Standard of Living:** Higher per capita income generally indicates a higher standard of living, as it implies more resources and better access to goods and services for individuals. 2. **Economic Health:** It reflects the overall economic health of a country. Countries with higher per capita income are usually more developed with better infrastructure, healthcare, and education systems. 3. **Income Distribution:** Although it doesn't address income distribution directly, per capita income gives a rough estimate of how wealth is spread across the population. However, it's important to complement this with other indicators to understand the inequality in income distribution. 4. **Comparative Measure:** It allows for a straightforward comparison between countries, enabling policymakers and analysts to gauge the relative economic performance and development levels of different nations. While per capita income is a useful indicator, it has limitations. It does not account for income inequality, non-monetary aspects of well-being, or differences in cost of living. Therefore, it should be used in conjunction with other indicators such as Human Development Index (HDI), literacy rates, and life expectancy to get a more comprehensive view of a country's development.