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 use 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
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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 the 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: A person who is hired for a job works for someone else and get paid for it. He/She is called the service holder.
These are the basics of Economics that are called ‘economic activities’ in which each person does any act where the money is involved which increases the production of goods and boosts income. Non-economic activities include political, social, religious, etc.
Must Read – Difference Between Micro and Macro Economics
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 labour 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 consumer divides his income into various products or services, he/she is involved in the consumption of the goods. 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 require proper and rational budgets for efficient consumption and satisfaction of desires and needs.
- Production: The use of raw material or combining material to yield an output or a product is called production. Production is also directly associated with any activity that satisfies the needs or wants of people.
- Distribution: When the material or wealth is divided into different aspects among people, it is called the distribution of Economics. The total income of production of a nation is called the ‘Gross Domestic Product’ (GDP of the country. It is further distribution in wages or is invested for production or international trade and supply.
Class 11 Introduction to Statistics in Economics
According to Merrian-Webster, “Statistics is a branch of mathematics dealing with the collection, analysis, interpretation, and presentation of masses of numerical data.” It is used to analyse qualitative and quantitative concepts and is an important topic for the Class 11 Introduction to Statistics in Economics.
Did you know? “Statistic” is derived from the New Latin term ‘statisticum collegium’ (“council of state”) and the Italian word “statista” which means “statesman” or “politician”. The German Statistik designated the analysis of data about the state or the “science of the state”
Statistics and Economics
For better understanding and depiction, all the economic information that is collected is in numerical form and are known as economic data. 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. These measures that help solve economic problems are known as policies. Statistics helps in crafting all the above-mentioned concepts in a clearer and 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 57% from a year ago to INR 232.60 ($3.12/kg ).
List of Economics Project for Class 12!
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