# Introduction to Statistics for Economics

This page contains the NCERT Statistics for Economicsclass 11 chapter 1 Introduction (to Statistics for Economics) from the book Statistics for Economics. You can find the solutions for the chapter 1 of NCERT class 11 Statistics for Economics, for the Short Answer Questions, Long Answer Questions and Projects/Assignments Questions in this page. So is the case if you are looking for NCERT class 11 Statistics for Economics related topic Introduction (to Statistics for Economics) question and answers.
EXERCISES
1. Mark the following statements as true or false.
(i)
Statistics can only deal with quantitative data.
(ii)
Statistics solves economic problems.
(iii)
Statistics is of no use to Economics without data.
(i). Statistics can only deal with quantitative data.
❌ False:
Statistics clearly deals with both quantitative and qualitative data. While it emphasizes quantitative data, such as numerical measurements, it also acknowledges the importance of qualitative data, like gender, which cannot be measured in numerical terms but is essential in economic analysis.
(ii). Statistics solves economic problems.
✔ True:
While statistics alone does not directly solve economic problems, it is an essential tool used by economists to understand, analyze, and evaluate economic issues. By analyzing past data using statistical tools, economists can identify the causes of economic problems and develop appropriate policies to address them. Therefore, in the broader context of economic analysis and policy formulation, statistics plays a crucial role in solving economic problems.
(iii). Statistics is of no use to Economics without data.
✔ True:
Statistics relies heavily on data. Without data, statistical methods and analyses cannot be conducted. In the context of economics, data forms the foundation upon which statistical analysis is performed, making it an essential element for the application of statistics in economic studies. Statics underscores the importance of data collection, presentation, and analysis in economics, highlighting that without data, the role of statistics in economics would be significantly diminished.
2. Make a list of activities in a bus stand or a market place. How many of them are economic activities?
To create a list of activities commonly observed in a bus stand or a market place and determine which of them are economic activities, let’s first define an economic activity. Economic activities are actions that involve the production, distribution, or consumption of goods and services at all levels within a society. These activities are typically undertaken for monetary gain or livelihood.
Activities in a Bus Stand:
1.
Selling Tickets: Economic activity (involves the sale of a service).
2.
3.
Cleaning and Maintenance Services: Economic activity (service for maintaining the bus stand).
4.
Passengers Waiting for Buses: Not an economic activity (passive activity, no exchange of goods or services).
5.
Street Vendors Selling Snacks: Economic activity (sale of goods).
6.
7.
Security Personnel Monitoring the Area: Economic activity (provision of security services).
8.
Information Desks Assisting Passengers: Economic activity (service provision).
9.
Bus Drivers and Conductors Operating Buses: Economic activity (transport service).
10.
Commuters Buying Tickets: Economic activity (participating in a transaction).
Activities in a Market Place:
1.
Shops Selling Various Goods: Economic activity (sale of goods).
2.
Customers Buying Products: Economic activity (exchange of goods for money).
3.
Delivery Services Transporting Goods: Economic activity (logistics services).
4.
Negotiations over Prices: Economic activity (part of the buying and selling process).
5.
Street Performers Entertaining People: Economic activity (providing entertainment for donations or a fee).
6.
People Window Shopping: Not an economic activity (no monetary exchange).
7.
Food Vendors Selling Meals: Economic activity (food service).
8.
Janitorial Services Cleaning the Market: Economic activity (provision of cleaning services).
9.
10.
Market Surveys Being Conducted: Economic activity (information gathering for business purposes).
In both the bus stand and market place, most of the activities listed can be classified as economic activities because they involve the exchange of goods or services for monetary value. However, some activities like waiting for a bus or window shopping, despite occurring in these settings, do not constitute economic activities as they don’t involve a direct exchange of goods or services for money.
3. ‘The Government and policy makers use statistical data to formulate suitable policies of economic development’. Illustrate with two examples.
The statement “The Government and policy makers use statistical data to formulate suitable policies of economic development” underscores the importance of statistics in guiding government decisions and policy formulation. Statistical data provides a factual basis for understanding various aspects of the economy, enabling policymakers to devise targeted and effective strategies for economic development. Here are two examples illustrating this concept:
1.
Policies for Employment and Job Creation:
Statistical Data Used: Unemployment rates, sector-wise employment statistics, educational levels of the workforce, geographic distribution of joblessness.
Policy Formulation: By analyzing unemployment rates and the distribution of jobs across various sectors and regions, the government can identify areas with high unemployment. If, for instance, the data reveals high unemployment rates among young college graduates, the government might focus on policies that encourage the growth of industries that align with their skills. This could include incentives for tech startups or investments in sectors like renewable energy, where new jobs are being created. Additionally, the government may implement vocational training programs in areas with low educational attainment to improve the employability of the workforce.
2.
Healthcare and Public Health Policies:
Statistical Data Used: Rates of various diseases, healthcare access indicators, demographic data on health disparities, data on healthcare spending.
Policy Formulation: If statistical data shows a high prevalence of certain diseases in specific regions or among certain demographic groups, the government can allocate resources more effectively to address these health issues. For example, if there is an increasing trend in diabetes or heart disease in certain areas, the government might increase funding for public health campaigns in those regions, focusing on diet, exercise, and regular medical checkups. Moreover, if data indicates that certain populations, such as those in rural areas, have limited access to healthcare, the government might invest in telemedicine or subsidize the establishment of clinics in underserved areas to improve healthcare accessibility.
In both examples, statistical data provides a comprehensive understanding of existing issues, allowing policymakers to craft strategies that are not only responsive to current challenges but also proactive in preventing future problems. This approach leads to more effective and efficient use of resources, ultimately contributing to more sustainable and equitable economic development.
4. “You have unlimited wants and limited resources to satisfy them.” Explain this statement by giving two examples.
1.
Personal Consumption Decisions:
This scenario of the consumer’s decision-making process, given their income and various goods to choose from, at known prices, directly reflects the principle of unlimited wants versus limited resources.
Example: Imagine a student with a limited amount of pocket money. They may desire various items like new clothes, books, gadgets, and entertainment experiences. However, due to the limited nature of their pocket money, they must make choices about what to buy, prioritizing some wants over others. This situation illustrates how, even though the student has numerous wants, their limited financial resources compel them to make selective choices.
2.
Scarcity in Daily Life:
The concept of scarcity in everyday life, such as long queues at railway booking counters or crowded buses, which are manifestations of scarcity.
Example: Consider the resources required for agriculture, like land, labor, water, and fertilizers. These resources are limited and have alternative uses. Farmers must decide whether to use these resources for food crops or non-food crops like cotton or rubber. Here, the limited resources (agricultural inputs) are insufficient to satisfy all possible uses (growing different types of crops), leading to the necessity of making choices.
These examples illustrate the fundamental economic principle of scarcity, where unlimited wants must be met with limited resources, necessitating choices and prioritization.
5. How will you choose the wants to be satisfied?
Choosing which wants to satisfy involves making decisions based on limited resources. Here’s how I would approach this:
1.
Prioritizing Needs over Wants: Essential needs come first. These include necessities for survival and well-being, such as food, shelter, and education. It emphasized that the importance of understanding consumer decisions based on available income.
2.
Budget Allocation: With limited financial resources, such as pocket money or earnings, it’s crucial to allocate a budget. This is how a consumer, in this case, a student like me, decides what to buy with the given income and knowledge of prices. This means planning expenses and maybe saving for bigger purchases.
3.
Assessing Value and Utility: Choose wants that offer the most value or utility. For instance, buying a book that helps in education might be more valuable than spending on short-term pleasures. This underlines the significance of making informed decisions based on available economic data.
4.
Long-term Goals over Short-term Desires: Prioritize long-term benefits. For example, saving money for higher education would take precedence over spending on leisure activities. Focussing on economic activities and decision-making aligns with this principle.
5.
Opportunity Cost: Consider the opportunity cost, which is what I give up when choosing one option over another. This can be understood from the choices in production and consumption based on available resources.
In summary, as a student of economics, I understand that the process of choosing which wants to satisfy involves a careful assessment of needs, budgeting, evaluating the long-term benefits, and understanding the opportunity cost involved.
6. What are your reasons for studying Economics?
The reasons for studying Economics are as follows:
1.
Understanding Economic Activities: Economics involves studying various economic activities like production, consumption, and distribution. Learning about these activities helps me understand how consumers make decisions based on their income and available goods, how producers decide what and how to produce, and how the national income is distributed.
2.
Analyzing Economic Problems: Modern economics includes analyzing basic problems facing the country, such as measuring poverty, income distribution, and the impact of education on earning opportunities. Studying Economics equips me with the knowledge to understand these issues better.
3.
Employing Scarce Resources: A key aspect of Economics, as defined by many economists, is the study of how people and society choose to employ scarce resources for producing various commodities and distributing them. This understanding is crucial for me as it highlights the importance of making informed choices in the face of limited resources.
4.
Statistics in Economics: Statistics is a vital part of modern Economics courses. It deals with collecting, analyzing, interpreting, and presenting numerical data, which is essential in understanding economic facts and making informed decisions.
5.
Formulating Policies to Solve Economic Problems: Knowledge in Economics helps in understanding how to formulate policies that can solve economic problems. Learning about how statistical methods are used to predict future trends and evaluate the impact of policies is an important reason for my interest in Economics.
6.
Addressing Scarcity: Economics also teaches about the nature of scarcity, which is the root of all economic problems. Understanding scarcity in daily life and how it leads to economic challenges is another significant reason for studying this subject.
7. Statistical methods are no substitute for common sense. Comment with examples from your daily life.
I understand that while statistical methods are crucial in analyzing data, they cannot replace common sense. Here are examples from daily life to illustrate this point:
1.
Average Depth of a River: There’s a story about a family where the father calculates the average depth of a river and the average height of his family members. He concludes that since the average height is more than the average depth, they can safely cross the river. However, this decision leads to a tragedy, as the children drown. This example shows that relying solely on statistical averages without considering variations and practical situations can lead to flawed decisions. Common sense dictates that river depths vary, and averages do not account for deeper sections.
2.
Grading in School: Consider a situation in school where the average marks of a class are used to assess the performance of all students. If the class average is high, it might be assumed that all students are performing well. However, this statistical method doesn’t consider individual variations where some students might be struggling. Here, common sense tells us that each student’s performance needs individual attention, which an average cannot provide.
3.
Weather Forecasts: Weather forecasts often use statistical models to predict the weather. Suppose a forecast indicates a 70% chance of rain. While statistics guide us in taking an umbrella, common sense also dictates to consider the time of day, the location, and personal experience. For instance, if I’m going out for a short time, I might decide not to carry an umbrella, depending on the sky’s appearance.
In conclusion, these examples demonstrate that while statistics are a powerful tool for understanding trends and making predictions, they should be used in conjunction with common sense, which accounts for the nuances and complexities of real-life situations.