DELHI PUBLIC SCHOOL SURAT

SUBJECT: STATISTICS REFERENCE MATERIAL CLASS: XI

CHAPTER 1 - INTRODUCTION
IMPORTANT TERMS
As per Alfred Marshall (one of the founders of modern economics) Economics is “the study of man in
the ordinary business of life”. It enquires how he gets his income and how he uses it. Thus, it is on the
one side, the study of wealth and on the other and more important side, a part of the study of man.
Consumer: A consumer is one who consumes goods and services for the satisfaction of his wants.
Producer / Seller: He is the one who produces/sells goods and services for the generation of income.
Service holder: A service-holder is a person who works for some other person and gets paid for it in the
form of wages or salary.
Service provider: A service-provider is a person who provides some kind of services to other for a
payment. Eg: Doctor, Lawyer, etc.
Economic activity: Economic activities are ones that are undertaken for a monetary gain. Economic
activities are concerned with all those activities, which are concerned with production, consumption
and distribution of goods and services, which are not available for free. For example, worker working
in a factory, shopkeeper selling in his shop, doctor attending patient in clinic etc.

Consumption

Economic
Activity

Distribution Production

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 1. Consumption: Consumption is an economic activity which deals with the use of goods and
services for the satisfaction of human wants.
2. Production: Production refers to all activities which are undertaken to produce goods and
services for generation of income and satisfying human wants. Land, labour, capital and
entrepreneur are the four factors of production.
3. Distribution: Distribution is that economic activity which studies how income generated is
distributed among the factors of production. It deals with determining how the total income
arising from the production process (known as Gross Domestic Product or GDP) is distributed
to land, labour, capital and entrepreneur in the form of rent, wages, interest and profit
respectively.
Non- economic activities: Activities which are not concerned with creation of money or wealth are
known as Non- economic activities. For example: Housewife cooking food for her family or a teacher
teaching his own son, free education to needy students etc.
SCARCITY
Scarcity refers to a situation when resources are not enough to satisfy all the wants of its people.
Scarcity is the root of all economic problems. We face scarcity because the things that satisfy our
wants are limited in availability. The resources which the producers have are limited and also have
alternative uses. Thus alternative uses of resources give rise to the problem of choice between different
commodities that can be produced by those resources.
What is Economics?
“Economics is the study of how people and society choose to employ scarce resources that could have
alternative uses in order to produce various commodities that satisfy their wants and to distribute them
for consumption among various persons and groups in society.”
STATISTICS
Statistics means quantitative information or quantification of facts and findings.
In its Plural sense, Statistics refers to information in terms of number or numerical data. However, any
numeric information is not statistics. Only averages or aggregates of data that relate to some enquiry or
phenomenon are to be taken as statistics.
In the Singular sense, Statistics means science of statistics or statistical methods. It refers to the
science which deals with the techniques or methods relating to collection, organization, presentation,
analysis and interpretation of quantitative data. Such techniques or methods are called Statistical
Tools.
Quantitative data refers to the quantitative variables like income, expenditure, investment, etc.
which can be expresses in numerical terms.
Qualitative data refers to qualitative attributes or characteristics of different objects like IQ
level, beauty, etc. which cannot be expressed in numerical terms. These can be either ranked or
rated.

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 Statistics in two senses

Plural sense Singular sense

Statistical Data Statistical Methods

(Numerical Information) (Methods of dealing with information)

Statistics in Plural Sense (as Numerical Set of Data):

FEATURES OF STATISTICS
1. Aggregate of Facts:
Single or isolated figures are not considered to be statistics because such figures are unrelated
and cannot be compared. A single figure of the boy of 26 years would not constitute statistics. It
is just a numerical statement the fact. Statistical data are concrete numbers which represent
objects
2. Systematically Arranged:
A proper plan should be prepared before collecting the statistical data. Data collected in a
haphazard manner would lead to false conclusions. Therefore, data should be collected in a
systematic manner.
3. Statistics are Estimated or Enumerated
According to the feature of statistics, data can be enumerated or estimated. If the numerical
statements are precise accurate, then they can be enumerated. Contrary to this, if the field of
investigation is large and beyond comprehension, then the estimation procedure can be adopted.
4. Statistics are numerically expressed:
All statistics are expressed numerical figures i.e. expressed in numbers and related to
quantitative information only. Qualitative characteristics do not come under statistics unless
they are assigned certain ranks as a quantitative measure of assessment.
5. Statistical Data Collected for a Pre-Determined Purpose:
Collected should be, for a pre-determined purpose. The figures are collected with some goal
objective in mind. Without any objective collected data will be useless. Thus, the purpose of
collecting data must be decided in advance.
6. Placed in Relation to each other:
Numerical information's must be related and comparable. Unless they have the quality of
comparison they cannot be called statistics. For example, statistics related to number of children
born, exports country, coal production etc. have no relevance for statistical analysis.

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Statistics in Singular Sense (as a Method):

1. Collection of
Data

5. Interpretation 2. Organisation
of Data of Data

4. Analysis of 3. Presentation of
Data Data

IMPORTANCE & FUNCTIONS OF STATISTICS

1. Quantitative Expression of Economic Problems
Consider any economic problem be it the problem of unemployment, the problem of price rise.
The first task of economist is to understand its magnitude through its quantitative expression,
and this is done with the help of statistics.
2. Business Decisions
Statistics involves making decisions, and in the business world, you often have to make a quick
decision then and there. Using statistics, you can plan the production according to what the
customer likes and wants, and you can check the quality of the products far more efficiently
with statistical methods. In fact, many business activities can be completed with statistics
including deciding a new location, marketing the product, and estimating what the profit will be
on a new product
3. Construction of Economic theories or models
Much of economics depends on statistics. Economists use statistics to collect information,
analyze data, and test hypotheses. Relationships between supply and demand and imports and
exports are found using statistical information. The same can be said for figuring out the
inflation rate, the per capita income, and even the national income account. A good example of
statistics and economics in the real world would be the Census Bureau and the information they
collect and use to decide many other political items.
4. Making data precise
It enables an economist to present economic facts in a precise and definite form that helps in
proper comprehension of what is stated. This data is more convincing than vague figures and
can be used for further analysis and interpretation.
5. Formulation of Plans and Policies
A nation‟s government runs on statistics. They use statistical data to make their decisions
regarding any number of things. Most federal and provincial budgets are designed upon
statistical data because it‟s the most accurate data available when estimating expected
expenditures and revenue. Another great example of statistics in the government is figuring out
whether or not to raise the minimum wage due to a rise in the cost of living. Statistical data
gives the government the best idea regarding whether or not the cost of living will continue to
rise.
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 6. Working out cause and effect relationship
Statistics is used for finding relations between different economic factors and to study the cause
and effect relationship. By applying statistical methods, we can verify the relations and also test
the validity of the same.
7. Inter sectoral and Inter-temporal comparisons:
Inter-sectoral comparison means, comparisons across different sectors of the economy. Inter-
temporal comparison means understanding of change in the magnitude of the problem over
time. All this is possible through expression in terms of numbers.
8. Economic forecasting:
Economists do forecasting through statistical studies. By the term forecasting we mean to assess
and ascertain the future course of certain events which are of economic significance. As on
studying the behaviour of price level over several years, the economist can make statistical
forecasting about the likely trend of the price level in the near future.
LIMITATIONS OF STATISTICS
1. Study of numerical facts only
Statistics studies only such facts that can be expressed in numerical terms. It does not study
qualitative phenomena like honesty, friendship health etc.
2. Results are true on an average
Most statistical findings are true only on as averages. They express only the tendencies. Unlike
the law of physical science or chemistry, statistical observations are not absolutely true. For
instance, if it is said that per capita income in India, is Rs.18000 per annum, it does not mean
that the income of each and every Indian is Rs.18000 per annum. Some may have more and
some may have less than that.
3. Without reference, results may prove to be wrong
In order to understand the conclusions precisely, it is necessary the circumstances and
conditions under which these conclusions have been drawn are also studied; otherwise it may
prove to be wrong.
4. Prone to misuse
Misuse of statistics is possible. Statistics may prove true what is actually not true. Misuse of
statistics is its greatest limitation.
5. Can be used only by the experts
Statistics can be used only by those people who have knowledge of statistical methods. Those
who are ignorant about these methods cannot make sensible use of statistics.
6. Homogeneity of Data, an Essential Requirement
To compare the data, it is essential that statistics are uniform in quality. For example,
production of food grains cannot be compared with the production of cloth.
7. Study of aggregates only
Statistics studies only the aggregates of quantitative facts. It does not study any particular unit.
For example, if the income of Ram is ₹ 3,000 per month, it has no relevance in statistics. But if
the income of Ram is ₹ 3000 p.m., that of Sohan is ₹4000 p.m., and of Rohan is ₹ 5000 in the
aggregate of ₹ 12000 and the average of ₹ 4000, it makes sense in terms of relative income of
Ram, Sohan and Rohan. Average income will lead to the conclusion that all three belong to

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 low-income group. Such conclusions would not have been possible from the study of Ram‟s
income alone.

DISTRUST OF STATISTICS
In spite of valuable services that statistics renders to business community and to scientists, both social
and natural, there is some amount off misgiving in the minds of a few people regarding their usefulness
and reliability.
Distrust of statistics arises not because there is anything wrong with statistics as a subject matter. It
arises because of the users of statistics tend to manipulate it to suit or support their pre-drawn
conclusions or observations.
Example: the government claimed that in 2006, per capita income in India increased by about 17%. On
the other hand, the opposition party claimed that in 2006, per capita income increased by 5% only. But
the difference lies in the fact that whereas government estimates are based on current prices, those of
the opposition party are based on the 1999-2000 prices. It is difficult for a layman to understand this
difference. He will just be confused by the claims and counterclaims of the two parties.
Hence, statistics should not be relied upon blindly nor distrusted outright. In making use of statistics,
one should be cautious and vigilant.

STATISTICAL METHODS ARE NO SUBSTITUTE FOR COMMON-SENSE

This is a statement of caution to the students of statistics. It urges the students not to use statistics
devoid of their common sense. For e.g. average size of shoes for the 50 students in your class may be
„6‟. But it would be foolish to place an order of 50 shoes of the size „6‟ for each student. Surely this
size may not fit many of you.
QUESTION BANK
VERY SHORT – ANSWER QUESTIONS (1 MARK)

1. Briefly explain the meaning of statistics in singular sense.

2. What is meant by distrust of statistics?
3. Mention two limitations of statistics.
4. What type of facts is not studied by statistics?
5. Give two examples of qualitative data.
6. Would you call it statistics if it is said that there are 2,000 students in our school?
7. What is meant by statistical tools?

SHORT – ANSWER QUESTIONS (3 AND 4 MARKS)

8. Define Statistics in plural sense. Point out its characteristics.
9. Define statistics in singular noun. Discuss various statistical methods involved in it.
10. Enumerate the limitations of statistics.
11. Distinguish between qualitative data and quantitative data. Give two examples of both.
12. „Statistical methods are no substitute for common sense‟. Comment.
13. How is statistics important for studying economics?
14. Explain the importance of statistics in business.