Class 11 Introduction to Statistics in Economics

Each one of us has been using Economics to deduce decisions and make reasonable and making money-smart choices. These frugal decisions are contributing to what we know as Economics. For many years, countries across the globe used Economics for understanding and using strategies to save money and optimize production. In this chapter for class 11 Introduction to Statistics and Economics, we will learn the significance of the two concepts and how they overlap.

“Economics is the study of how people and society choose, with or without the use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future among various persons and groups of society.”
– Paul Samuelson

What is the Need of Statistics in Economics?

For the Class 11 Introduction to Statistics in Economics, let’s begin understanding Economics by quoting the line by one of the founders of modern Economics- Alfred Marshall, “The study of man in the ordinary business of life”. This sentence has a deeper meaning than what one reads. Each human plays a role in Economics. The three characters are: 

• Consumers: A consumer is someone who buys or ‘consumes’ goods, either for his personal needs or requirements. 
• Sellers/Service Provider: A seller is someone who sells goods to earn a profit. A service provider plays the same role. Instead of selling things, they provide services to earn money.
• Producers: A person who manufactures or produces goods by conversion of raw material.
• service holder: Service holder is someone who works for another company and gets reimbursed for their efforts. The service holder is the person in control of the service.

These are the fundamentals of Economics, often known as “economic activities,” in which each person does any act involving money that enhances the creation of commodities and raises revenue. Political, social, and religious activities are examples of non-economic activities.

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Scarcity – Introduction to Statistics in Economics

With the increasing population, there is an increase in demand with limited resources. This leads to scarcity (also known as paucity) of goods. Scarcity is the main cause that gives rise to multiple economic problems. We experience scarcity of various things like labor scarcity, water scarcity, animal scarcity, etc. When humans exhaust or over-utilize resources, it leads to scarcity in various aspects. 

Consumption, Production, and Distribution

The study of Economics is classified into three major aspects: 

• Consumption: When a customer distributes his income among several things or services, he is engaging in commodity consumption. We consume thousands of goods each day like; the table we use, the food we eat, the phone we use, etc. Consuming these economic activities requires proper and rational budgets for efficient consumption and satisfaction of desires and needs. 
• Production: Production is the process of using raw materials or combining materials to create an output or a product. Production is also closely related to any action that meets people’s needs or desires.
• Distribution: When material or wealth is divided into diverse characteristics among persons, economic distribution happens. The total income from output of a country is known as its ‘Gross Domestic Product’ (GDP). It is additional wage distribution or investment in manufacturing or international commerce and supply.

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Function of Statistics

Following are the basic function of statistics in class 11 economics

• Statistics help to simplify complications.

• It uses numbers to convey facts.

• It delivers information in a concise format.

• Statistics examines several occurrences and confirms the existence of a link between them.

• Statistics are useful in policy formulation.

• It makes comparisons easier.

• It may be used to test the rules of other disciplines.

• It aids in the construction of a link between two facts.

Statistics and Economics

Economic data is in numerical form for better understanding and portrayal. It helps in elaborate explanations in brief and calculative forms and also helps in quick analysis of the core issues like poverty, unemployability, inflation, etc. To diminish these issues, it is important to find solutions or certain measures to reduce them. Policies are the actions that aid in the resolution of economic difficulties. Statistics helps in crafting all the above-mentioned concepts in a clearer and more direct manner. Statistics is an integral part of studying Economics which also includes learning about the collection, classification, and tabulation of data. 

An example of the use of Statistics and Economics is:

Due to the onset of COVID-19, the production of tea in India fell  26.4% from a year ago to 348.26 million kilograms (kg). According to the tea board, this also increased tea prices by 57% from a year ago to INR 232.60 ($3.12/kg ).

CBSE Class 11 Statistics Important Questions

List of Economics Project for Class 12!

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