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It compares people of the same age or age category and assumes that IQ is normally distributed, that the average (mean) is 100 and that the standard deviation is something like 15 (IQ tests sometimes differ in their standard deviations).
IQ is generally considered to range from 0 to 200 Here is the general ranges of scores for IQ Tests and what they mean: IQ Range Classification. 140 and over ----------- Genius or near genius. 120-140 ----------------- Very superior intelligence. 110-120 ----------------- Superior intelligence.