1. Important Terms
- Consumer: A person who uses goods and services to satisfy wants.
- Consumption: The act of using goods and services for the satisfaction of human wants.
- Producer: An individual or organization that produces or supplies goods and services.
- Production: The process of creating goods and services with the help of land, labor, capital, and entrepreneurship.
- Savings: The part of income which is not spent on consumption and is kept for future use.
- Investment: The process of using savings for creating capital goods like machines, buildings, etc.
- Economic Activity: Any activity related to production, distribution, or consumption of goods and services for earning income.
- Economic Problem (Undercurrent of Economics): Scarcity of resources compared to unlimited human wants. It creates the need for choice and decision-making in economics.
2. Three Major Components of Economics
- Theory of Consumption: Deals with how consumers make choices to maximize satisfaction from limited income.
- Theory of Production: Explains how producers combine different factors of production (land, labor, capital, enterprise) to produce goods and services.
- Theory of Distribution: Deals with how national income is distributed among different factors of production in the form of rent, wages, interest, and profit.
3. Statistics
(a) Definition
Statistics is a branch of economics that deals with the collection, presentation, analysis, and interpretation of numerical data to understand and solve economic problems.
(b) Features / Characteristics of Statistics in the Plural Sense (as Numerical Data)
- Statistics are expressed in numbers, not in words.
- Statistics are collected in a systematic manner.
- Statistics are comparable and relate to each other.
- Statistics are based on mass data, not on individual data.
- Statistics are affected by multiple causes.
- Statistics are collected for a pre-determined purpose.
- Statistics must be accurate and reliable.
- Statistics are aggregates of facts, not isolated facts.
(c) Stages of a Statistical Study
- Collection of data
- Presentation of data (tables, graphs, charts)
- Analysis of data (averages, correlation, etc.)
- Interpretation of results
(d) Statistical Tools
- Stages: Collection, presentation, analysis, interpretation.
- Study: Descriptive statistics and inferential statistics.
- Tools: Averages, dispersion, correlation, regression, index numbers, probability.
4. Scope of Statistics
(a) Nature of Statistics
- Deals with numerical facts.
- Concerned with a group or aggregate, not individuals.
- Involves systematic collection and analysis.
- Helps in studying social and economic problems.
(b) Concept of Universe or Population
The total set of items or individuals under study is called the universe or population. A part of it studied for convenience is called a sample.
(c) Subject Matter of Statistics
- Descriptive Statistics: Methods used for collection, presentation, and analysis of data.
- Inferential Statistics: Drawing conclusions and making predictions based on sample data.
(d) Limitations of Statistics (One line each)
- Statistics deal only with quantitative data, not qualitative facts.
- Statistics may be misused if collected or presented wrongly.
- Statistics do not reveal the entire story behind facts.
- Statistics are not exact like mathematics; they are approximations.
- Statistics require specialized knowledge for correct interpretation.
5. Functions and Importance of Statistics
(a) Functions of Statistics
- Simplifies complex data into simple form.
- Presents data in an attractive and useful way.
- Helps in understanding relationships between variables.
- Provides tools for comparison.
- Assists in forecasting and decision-making.
(b) Importance of Statistics
- Useful in economic planning and policy-making.
- Helps in studying market trends and consumer behavior.
- Useful for businesses in forecasting production and sales.
- Assists the government in framing budgets and welfare programs.
- Helps researchers and economists in analysis of economic problems.