Introduction
• Consumer “A consumer is one who consumes goods and services
for the satisfaction of his wants”.
• Consumption “Consumption is the process of using up utility value
of goods and services for the direct satisfaction of our wants”.
• Producer “A producer is one who produces/or sells goods and
services for the generation of income”.
• Production “Production is the process of converting raw material
into useful thing”.
• Saving It is the part of income which is not consumed. It is an art
of abstinence from consumption.
• Investment It is expenditure by the producers on the purchase of
such assets which help to generate income.
• Economic Activity It is an activity which is related to the use of
scarce means. Means are always scarce in relation to our wants.
• Economic Problem It is the problem of choice arising on account
of the facts that resources are scarce and these have alternative
uses.
Components of Economics There are three components of economics
• Consumption: As consumers people have limited means, while
their wants are unlimited. The way in which they allocate their
given income on the purchase of different goods and services so
that their satisfaction is maximised constitutes the study of
consumption.
• Production: Producers also have limited means while they have a
wide range of goods and services to choose from their firms and
factories. Given the prices of different inputs, how they choose a
combination which is least expensive, so that they are able to
minimise their cost of production constitutes the study of
production.
• Distribution: Different economic principles on the basis of which
income is distributed among owners of the factors of production,
such a study is called distributed among owners of the factors of
production, such a study is called distribution theory in economics.
Statistics:
Any information in numerical values or in quantitative form.
Statistics in Plural Sense
In a plural sense, Statistics means a systematic collection of numerical
figures and facts for a specified purpose in a field of study. The major
characteristics of statistics in the plural sense are:
• Numerically expressed: Statistics includes only quantitative or
numerical data. Qualitative facts like beauty, intelligence,
kindness, etc., are not considered in statistics. Instead, they can be
quantified by assigning a unit or score to them.
• Aggregate of facts: It means that the statistics can not be described
as single or isolated figures, as they cannot be compared by a user.
• Placed in relation to each other: In statistics, the data is usually
collected for the purpose of comparison. Therefore, to collect the
comparable figures it is essential that the data is homogeneous.
• Pre-determined purpose: The purpose of the study is pre-
determined as it helps in the systematic collection and analysis of
data and achieves accurate results.
• Reasonable accuracy: The data collected in statistics is done
through a reasonable standard of accuracy. It means that, unlike
mathematics or accountancy, a high degree of accuracy is not
insisted upon in this field.
• Affected by the multiplicity of causes: It means that there is no one
reason that affects the study of numerical facts or figures in
statistics.
• Collected in a systematic manner: To gain accurate and complete
results from the study of statistics, it is essential to collect the data
in a systematic manner.
Statistics in Singular Sense (COPAI)
In a singular sense, Statistics means collecting, presenting, analyzing,
and interpreting the numerical data for the study. Different stages of the
statistics study are:
• Collection of data: The first stage is to determine the method of
collection of data for a specific study and then gather data.
• Organization of data: The collected data is then simplified in a way
that one can compare it. The collected data in this stage is
classified as per the time and place.
• Presentation of data: The third stage is to make the organized data
simple and attractive by presenting it in the form of graphs, charts,
diagrams, and tables.
• Analysis of data: After the presentation, the data is analyzed to
attain accurate results. Some of the main methods of doing so are
Measures of Dispersion, Measures of Central Tendency,
Interpolation, etc.
• Interpretation of data: The last stage includes the enactment of the
conclusions. The comparisons are used, and ultimately, proper
forecasting is made.
Importance of Statistics in Economics:
• Quantitative expression of economic problem
• Inter-sectoral and inter-temporal comparisons
• Working out cause and effect relationship
• Construction of economic theories or economic models
• Economic forecasting
• Formulation of policies
Limitations of Statistics:
• Study of numerical facts only
• Study of aggregates only
• Results are true only on an average
• Without reference, results may prove to be wrong
• Can be used only by the experts
• Prone to misuse
Types of Statistics
The two main branches of statistics are:
• Descriptive Statistics
• Inferential Statistics
Descriptive Statistics – Through graphs or tables, or numerical
calculations, descriptive statistics uses the data to provide descriptions of
the population.
Inferential Statistics – Based on the data sample taken from the
population, inferential statistics makes the predictions and inferences.
