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We used to use a "planimeter" to calculate areas of irregular shapes. See http://www.thefreedictionary.com/planimeter for a picture. You pin one end to fix it to the drawing board then trace over the outline eith the pointer.
Otherwise, overlay the map with a grid and count the squares - using smaller squares for more accuracy. Trouble is maps are flat,ther earth is not, maybe they have more sophiticated techniques these days.
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Difficult one this. An old cartographer friend of mine gets a piece of string and guides it around the country in question in the Atlas.
He then ties the two loose ends up and then makes a circle. He then measures the radius in inches of the recently made circle. Now anybody who did maths at school knows the area of a circle is pi times radius squared. Thus he can work out the area of the country in question.
This is a tried and trusted method. Ah, you might query and say why is the area of Russia only 28 square inches? My answer to that is "get a bigger Atlas". Hope this helps.
It was done in the past by using the Calculus system. Basically, that involves dividing the map up using a series of parallel lines, calculating the area of each resulting segment, and adding the results together. The more irregular the shape, the narrower you make the segments. The principles were developed by Newton in England, and Leibniz in Germany. Have a look here
To Spudmuffa.
The method you described is not very accurate and only works for regions which are approximately circular.
To take an obvious extreme case where the method does not work at all- imagine a region which is rectangular and 100 times as long as it is wide.
Wrapping string around this will give a string length of 202 units.
Making a circle of this gives a radius of 32 units and an enclosed area of 3247 square units.
The actual area of the rectangle is of course 100 square units.
A planimeter works though.